Asian equity researchers face 25% comp cuts and pin hopes on CIMB

Equity researchers who’ve been cut from banks in Asia during a recent wave of redundancies had better send their CVs to CIMB, the Malaysian bank. Not many other firms on the buy-side or sell-side are hiring.

The layoffs began in the third quarter of last year when banks in Asia were forced to cut costs as the market downturn made their research teams look bloated and overpaid.

“Many large banks have paired backed back because research is seen as a low-margin business in a saturated market in Asia,” said John Mullally, associate director, financial services, at recruitment agency Robert Walters in Hong Kong. “If, for example, they had five experienced equity researchers covering a sector, now they might have one person and a couple of support staff,” he said.

In September, Deutsche Bank let go of 85 people in equity research, sales and trading in Hong Kong and Tokyo. A month later BNP Paribas cut about 15 equity research jobs in Asia. And Samsung Securities announced in February that it will quit equity sales, trading and research outside of South Korea, leading to layoffs of Hong Kong-based researchers. Firms including Barclays and Morgan Stanley have also cut researchers as part of wider job losses in Asia.

The job market in equity research hasn’t recovered since then. “Top-tier firms are still under significant cost pressure,” said Nick Lambe, managing director, Hong Kong, at recruiters Morgan McKinley. “Research teams tend to be cost heavy and are being looked at closely,” he said.

Lambe said recruitment in equity research at large banks in Hong Kong was limited to “opportunistic” poaching of senior analysts. Earlier this week, Bank of America Merrill Lynch hired top-rated analyst Ajay Kapur from Deutsche Bank as its Asia-Pacific equity strategist.

One hope?

Buy-side firms in Hong Kong weren’t hiring many equity researchers from the banks either, said Mullally from Robert Walters. But CIMB, which inherited equity research teams in April last year when it bought some of the Asian units of Royal Bank of Scotland, is recruiting. The Malaysian firm expanded its Hong Kong research team last week with senior hires from Standard Chartered, ING and Religare Capital.

CIMB wants to take on the bulge bracket and become the first Southeast Asian bank to become a top-tier broker in Asia, according to Finance Asia. A Hong Kong recruiter, who asked not to be named because of client confidentiality, said the bank was able to pick up good talent because its larger rivals weren’t recruiting. “They’ve timed the hiring perfectly because there are plenty of people interested in joining them now who might not have been three years ago when the market was hot,” he said. CIMB has not yet replied to a request for comment on its hiring plans.

The recruiter said CIMB had been able to hire “without offering big salary increases or silly bonus guarantees”. Total compensation offered to new recruits in equity research in Hong Kong had fallen by about 25% compared with its peak in 2010, he estimated.