Worsening financial crisis: Global financial firms like Bank of America Merrill Lynch, Nomura, UBS, HSBC cutting jobs in India

MUMBAI: Global financial companies have begun cutting jobs in India as the worsening financial crisis in the West dims business outlook, forcing companies to scrap fund-raising and M&A plans. Bank of America Merrill Lynch, Nomura, UBS and HSBC are among the companies sacking employees in the third wave of financial market job cuts since the Asian crisis of 1997.

More than 200 have been laid off in investment banking in the past few weeks in corporate banking and retail divisions as the banks strive to remain meaningful amidst a general slowdown. "We are seeing selective cost rationalisation, as a reaction to market outlook," said Sonal Agrawal, head of executive search firm Accord India. "Some firms that were building out businesses have a diminished appetite for further investment at the moment, due to global woes."

For the Indian financial services industry, this is the third time that global banks are rolling back investments after making optimistic statements about the growth opportunities. The Asian crisis of 1997 led many, including Dresdner and Societe Generale, to close their Indian subsidiaries leaving scores jobless. A decade later came the subprime crisis that forced many, such as Merrill Lynch and Credit Suisse, to cut headcount.

The European financial crisis may have just begun to impact India, in terms of financial services jobs. Hong Kong and Shanghai Bank Corp, which plans to eliminate more than 30,000 jobs worldwide, told over 120 employees engaged in the recovery of sticky loans in India to find new jobs.

Barclays India, meanwhile, has sacked 12 executives from its small and medium enterprises business. "For our group, we have seen 30,000 rolls which will disappear," says Stuart Davis, HSBC India chief executive.

"If you translate that into Asia-Pacific, we would be reviewing the level of bureaucracy and efficiency. We will be doing in India as we would do in other parts of the world." Credit Suisse AG, the second-biggest Swiss financial services company, laid off more than 14 people in its India wealth management team some weeks ago.

BofA-Merrill Lynch recently fired five members of its investment banking team, and two from its prop trading and global market division, people with direct knowledge of the matter said. The bank's India operations employ about 1,000. Some more layoffs are expected in the bank's investment banking division.

Swiss financial firm UBS, whose global CEO Oswald Gruebel resigned on Saturday over rogue trading loss, recently handed pink slips to six India staffers. The firm has a sword hanging over its global investment banking division and more job cuts are expected to be announced soon, people familiar with the development said.

Japanese firm Nomura, too, is not immune and has asked three members from its investment banking division and an analyst to go. Fears of a worsening European sovereign debt crisis have shaken the global financial services industry. The expected spurt in regulatory measures to deal with the problem could crimp profits and keep growth muted.

JPMorgan Chief Executive Jamie Dimon recently suggested that the US should reject the so-called Basel III, the newest set of bank regulations. "The current scenario is a function of what is happening globally. Most multinational companies have become more cautious and slow with their investment and expenditure decisions," said Deepak Gupta, country head and managing director at executive search firm Korn/Ferry International.

Source: Economic Times