By: 永久浪客/Forever Vagabond
Reuters reported on Fri (23 Sep) that Goldman is axing nearly 30 percent of its 300 investment banking jobs in Asia outside of Japan. Most of the job cuts would come from Hong Kong, Singapore and China, where Goldman’s main Asian offices are located.
It is reducing the number of bankers working on mergers and acquisitions (M&A), and equity and debt capital markets deals.
Goldman has been hit by a lacklustre environment for deals across Asia. The total value of M&A deals has dropped by some 23 percent from last year to this year.
In response to a “challenging backdrop” for revenue, it is cutting staff to save cost. It was reported that Goldman’s 3 existing partners in the region had been stripped of their titles.
Staff left Goldman Singapore including its SE Asia chairman
Last year, Goldman has already reduced the number of its investment bankers in Singapore from 50 to 35. More are expected to depart this year.
One of its biggest stars who left the Singapore office this year is its Southeast Asia chairman Tim Leissner.
He is a German expat who in 2002, was made head of Goldman investment banking in Singapore. It took him only a few years before he networked his way to help the bank soar in Southeast Asia – culminating in billion-dollar deals with Malaysia’s state fund 1MDB. His wife Kimora Lee who is a former model, is believed to be friends with the wife of the Malaysian PM.
Goldman received rich commissions for the IMDB bond sales, arranged by Leissner and his team. 1MDB is now at the center of allegations of secret transfers of hundreds of millions of dollars to Malaysian PM Najib’s private accounts. Najib has denied accusations of corruption.
Bloomberg reported that Leissner himself had received a six-figure deposit into his personal account after the Goldman-backed bond deals had been completed.
It is reported that Goldman has earned fees and commissions of US$593 million out from a total bond sales of US$6.5 billion in the 1MDB deal. This means Goldman was receiving a cut as high as 9.1 per cent in the deal, when the typical market amount is 5 per cent.
According to one AFP source, Leissner was suspended by Goldman in Jan for violating company policies on a matter separate from the 1MDB case. He then left Goldman in Feb this year.
He was also subpoenaed by the U.S. Justice Department in its money laundering probe linked to 1MDB. He was issued the subpoena in late Feb, days before Goldman confirmed that he had parted ways with the bank.
The New York Post reported in Feb that the FBI were investigating all the fund’s transactions due to money-laundering allegations in five countries.
Authorities in several other countries are also investigating the money flows. Swiss authorities have said they believe $4 billion may have been stolen from Malaysian state firms and have frozen millions of dollars in accounts linked to 1MDB.
Singapore has seized ‘a large number of bank accounts’ in its 1MDB investigations. “Singapore is also cooperating closely with relevant authorities, including those in Malaysia, Switzerland and the United States,” said a joint statement issued from MAS and CAD earlier.
Other foreign banks cutting staff too
Other MNCs have also been cutting its staff. Last year, Standard Chartered shut down its equities franchise.
In January this year, Barclays announced it would cut about 1,000 staff in its investment bank operations worldwide, with the bulk happening in Asia. Societe General decided to close its equities research desk in India.
Other European banks including BNP Paribas and Deutsche Bank are expected to scale back operations in non-core Asian markets.
Many of these foreign banks have been hit by a drop in Chinese trading volumes and competition from local banks.