Macquarie Group Ltd plans to cut about half of its investment-banking workforce in Asia as chief executive officer Nicholas Moore reshapes the firm, people familiar with the matter said.
About 80 to 90 jobs would be eliminated in the reductions, one of the people said, asking not to be identified because the decisions are confidential. Jeremy Wernert, who was named as head of Macquarie Capital for Asia less than a year ago, is leaving and will be replaced by Hajir Naghdy, who runs Middle East investment banking, one of the people said.
Investment banks are cutting jobs in Asia as tighter competition for deals force them to pick business areas to focus on and discard others. Macquarie’s cuts also reflect Moore’s strategy of shifting the company toward more stable businesses such as leasing, fund management and lending after struggling to compete with firms like Goldman Sachs Group Inc. and Morgan Stanley in stock underwriting and M&A advisory.
“Asian investment banking is very competitive and Macquarie’s move may be reflective of its general strategy,” T.S. Lim, a Sydney-based analyst at Bell Potter Securities Ltd, said. “It’s about reducing headcount in Asia and concentrating on successful markets such as Australia and North America. Also it goes with the trend of investing in non- cyclical businesses.”
Asian retreat
Macquarie shares climbed 1.1% to A$77.28 at 2pm in Sydney, taking gains for this year to 33%.
Fiona McDonald, a Hong Kong-based spokeswoman at the Australian bank, declined to comment. Wernert didn’t return calls to his mobile phone seeking comment. Naghdy will be based in Hong Kong oversee Macquarie Capital in Asia and the Middle East, the person said.
Macquarie’s Asian retreat follows cuts among global competitors including Goldman Sachs and Royal Bank of Scotland Group Plc. New York-based Goldman Sachs is reducing the size of its investment-banking team in Singapore by about 30% compared with the start of the year, people familiar with the matter said this month.
Citigroup Inc., CIMB Group Holdings Bhd. and Nomura Holdings Inc. have also cut jobs in Asia this year as tougher regulations and higher capital requirements put pressure on financial firms.
Stock sales fall
The Macquarie cuts will be described to employees on Tuesday and occur across Hong Kong, Singapore, Korea, India and Japan, while excluding Australia, one of the people said. Some affected staff in Japan have been told since the end of last week to leave, the person said.
Companies sold almost $23 billion of stock in Asia excluding mainland China in the first quarter, the lowest amount in more than three years, data compiled by Bloomberg show. Foreign investment banks need a joint-venture partner to underwrite stock offerings in China.
Macquarie ranks 21st in advising on mergers and acquisitions (M&As) involving Asian companies this year, data compiled by Bloomberg show. The profit contribution from its investment banking unit dropped to A$280 million ($214 million) in the year to March 2014 from A$2.92 billion in 2008, the data show.
Principal investments
Moore has been trying to boost Macquarie’s principal investments business, where activities include providing capital to clients making acquisitions and investing in companies preparing to go public. Former Asia CEO Alex Harvey was named global head of principal investments in May.
Macquarie is expected to report net income of A$1.49 billion for the fiscal year to 31 March, according to the mean estimate of 10 analysts surveyed by Bloomberg. That would be the biggest profit since the record A$1.8 billion it posted in March 2008, according to regulatory filings.
Asia is Macquarie’s smallest region and contributed revenue of A$419 million, or 10% of the six-month total through 30 September, filings show.
The non-cyclical businesses of asset management, lending and leasing have increased profit to A$2.14 billion from A$415 million in the same period, the data show. Bloomberg
Source: http://www.livemint.com/Companies/D679MoRMHgT6D5e4ucIWeI/Macquarie-said-to-cut-Asia-banking-workforce-as-deals-fizzle.html
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