It seems banks may have overshot their outlook in Asia, and bankers will pay the price. Despite the fact that Asia-Pacific continues to be the fastest growing region for banks – its revenue contribution having risen to 20 percent of the global pot in 2011 from 16 percent in 2010 – banks are souring on the region, and bankers at big financial firms are bracing for layoffs after bonuses are paid this month, according to the Wall Street Journal. While cuts are expected across the board, employees focused on China are at less of a risk, while the poor performance of strategies focused on Japan and India will be cut back.
The article says some banks are rethinking expansion plans and are trying to make up for the lost revenue in their core banking business by selling other services, such as asset management or corporate banking. Consultants and bankers are quoted as saying lower bonuses and job cuts are likely as the market matures and competition increases, especially for banks that have been among the last to enter or expand their presence in the region.
Nomura, Citigroup, Goldman Sachs and Bank of America have already made small cuts, while Morgan Stanley workers are expecting a bigger round of layoffs in the next few weeks.
Analysts expect bank shares to surge 57 percent in 2012. [Bloomberg]
Hedge funds ended 2011 on terrible note. [DealBook]
Hedge funds are on track for record flows in 2012. [On Wall Street]
More than 1,400 companies will go public this year, but bankers expect 2012 to be as rough as 2011. [Financial Times]
Opinion: Expect fewer smaller investment banks in the new year. [Reuters]
Opinion: The government should back all bank deposits and discourage derivatives trading and other risky business. [NY Times]
Citi sues a hedge fund manager in Singapore over gold losses. [Businessweek]
Citi sold a record amount of bonds. [Financial Times]
Nomura pulled ahead of Goldman to hold on to the top spot for M&A advisory work in Japan in 2011. [Businessweek]
Jefferies employees threatened to leave over a compensation dispute. [WSJ]
MF Global’s UK staff may not get the bonuses they were promised. [Bloomberg]
Swiss bankers were charged with helping U.S. clients hide assets. [NY Times]
The SEC sided with the Lehman brokerage in a $3 billion dispute over assets with Barclays. [Bloomberg]
JPMorgan Chase has been sued for $95 million over mortgage securities. [Reuters]