Global Economics

Morgan Stanley Lays Off Hong Kong Bankers


As leveraged finance transactions slow to a trickle, bankers Peter Szekely and Ponty Singh are let go as part of a global drive to cut costs

Morgan Stanley has let go of two of its leveraged finance bankers in Asia as part of a global round of job cuts that will reduce the bank's headcount by 5%.

A Hong Kong-based spokesman confirmed that the two bankers are Peter Szekely, a product specialist within the leveraged finance and acquisition business in Asia, and Ponty Singh, who worked on the client coverage side with a focus on leveraged finance origination and high-yield bonds in Southeast Asia and India. Both bankers were promoted to managing directors in December last year.

The US investment bank said a couple of weeks ago that it would initiate another round of job cuts in the wake of subprime-related losses that forced the bank to write off a combined $9.4 billion in October and November last year (resulting in a fourth quarter loss of $3.6 billion) and seek a $5 billion equity investment from China Investment Corporation. The latest round of layoffs will affect 5% of the bank's staff, which totals about 47,000 people globally, the bank told reporters in the US. It provided no breakdown on where these cuts will be made, but the majority are expected to come in the US and be carried out over the next few weeks. Morgan Stanley has already cut at least 3,000 jobs since October last year.

It should come as no surprise that leveraged finance is one of the affected areas, given the sharp slowdown in this business globally. Based on Dealogic data, there have been only five leveraged buyout deals in Asia-Pacific so far this year, compared with 11 in the same period last year, and the deal value is down 31% to $4.7 billion. The decline is even more severe globally with a 62% drop in the number of deals to 115 and a 76% reduction in the deal value to $66 billion.

The Hong Kong spokesman stressed that the two redundancies in Asia are purely a reflection of the current market conditions and the need to cut costs and not a shift in focus away from leveraged finance?? business which the bank only a year ago identified as a key driver of profit growth. Indeed, people familiar with the team structure say Morgan Stanley will still have 10 people focusing on leveraged finance in Asia.

While the fact that both Szekely and Singh had the title of managing director does in some way send a mixed message about the bank's commitment to the business area, it also indicates that the need to cut costs is definitely real and at a level where it would make little difference to cull from the bottom of the hierarchy. Neither of the two had been with Morgan Stanley that long, with Szekely joining from Credit Suisse in 2006 and Singh moving across from Citi about a year ago.

Banks across the board have been laying off workers to trim costs and industry sources estimate that some 65,000 jobs have disappeared at financial institutions worldwide since the subprime market crisis began.

In the past few days Lehman Brothers has been in the process of shedding roughly 1,400 jobs, or 5% of its global staff that numbered about 28,000 before the exercise began. There has been no information so far on how these job cuts are affecting its business in Asia, but sources say the layoffs will come mainly in the US. Asia will also lose fewer jobs than Europe, they add.

These latest redundancies at Lehman add to the more than 4,000 people who have already been fired from the bank over the past year, predominantly from its mortgage platform. This time around the pink slips have been handed out across all business segments, but if there's one department that has been hit harder than the rest it has been fixed income.


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