Goldman Sachs (NYSE:GS) has decided to axe close to 30 percent of the company’s investment banking jobs in Asia, according to reports. Currently, the banking firm has 300 workers in Asia. This will leave Goldman with about 200 bankers in the continent.
Employees to lose their jobs are mostly working on acquisitions and mergers, and debt capital and equity deals. Most of these workers are working from the company’s offices in China, Singapore, and Hong Kong, where their main offices are based. However, the company’s headcount in Japan is expected to remain the same. There will be no retrenchment in the country.
Last year too, Goldman Sachs had reduced the number of their workers. But that was only in Singapore. The Singapore office had 50 workers. 15 of them were told to go. This year, Tim Leissner, their Southeast Asia chairman, too departed the company.
Goldman Sachs Not Doing Well in Asia
The New York-based Goldman took 15 years to slowly build their Asian network in the expectation that their bankers will be able to unlock opportunities in India, China, and other places. But profits have not been steady. For instance, Chinese rivals dominate the Hong Kong market.
The revenue from their investment banking has come down by 11 percent in the second quarter. It now stands at $1.79 billion. The total value of deals signed has dropped to $572.9 billion. In the same period last year, it was way higher at $745.7 billion.
Last July, the firm announced a cost-cutting plan that will help them save $700 million every year. Goldman Sachs isn’t clearly seeing any revenue increase in the near future.
Industry analysts are saying that there are clear indications of a slowdown in Asia. The market is still trying to recover from the financial crisis of 2008. Rising local competition has also eroded the banks business.
Rivals of Goldman Sachs Are Scaling Down Too
But Goldman Sachs (NYSE:GS) is not alone. Many of their rivals from Europe have also announced plans of scaling down their Asia operations.
This includes Barclays that reduced 1000 staff members in January, most of them in Asia. Societe Generale has also closed down their India equities research desk. Deutsche Bank and BNP Paribas are also expected to scale down their operations in the non-core Asia markets. Standard Chartered that has a focus on Asia has shut down their equities franchise as well.