HSBC announced it would cut 500 jobs in Asia

Bankers in Asia, until now largely immune to the fallout from the global financial crisis, are feeling increasingly  vulnerable. On Tuesday, HSBC announced it would cut 500 jobs in Asia. And Citigroup's roughly 50,000 employees in Asia were faced with the grim reality that some of Monday's sweeping job cuts could hit them. In addition, a sharp fall in profit at Japan's biggest bank, Mitsubishi UFJ Financial Group, on Tuesday hammered home the message that the financial community in the Asia-Pacific region is likely to face increasing job cuts. Strong growth in most Asian economies and a lack of exposure to U.S. subprime mortgages have helped shield Asian banks from the mass layoffs of those on Wall Street and in London. But as the crisis drags on and deepens, and places like Japan and Hong Kong slip into recession, Asian banks are coming under pressure. "The financial crisis is well and truly here now," said Andrew Oliver, managing director at Profile Search & Selection, an executive search firm in Hong Kong. The bulk of HSBC's 500 job cuts in Asia were planned for Hong Kong, where the unemployment rate in the financial capital edged up to 3.5 percent in the period from August through October, from 3.4 percent in the July through September period, figures showed Tuesday. Citigroup shocked the financial community late on Monday with news that it was laying off 52,000 staff, or 14 percent of its work force, much more than the roughly 25,000 job cuts the bank had previously announced. The U.S. banking giant, which employs just over 50,000 people in the Asia-Pacific region, on Tuesday declined to provide a regional breakdown as to where the ax would fall, though the losses will be focused on the United States, and leave Asia-Pacific relatively unscathed, a person with direct knowledge of the situation said. The person spoke on condition of anonymity because of the sensitivity of the job cuts. Mitsubishi UFJ reported that its profits had plummeted 61 percent in the three months to the end of September. The bank made no comments about any possible job cuts, but the profit drop highlighted how Japanese banks are being squeezed and bankers across the region are scared for their future. Likewise, Morgan Stanley and Credit Suisse, which have also recently announced job losses - though on a smaller scale than those at Citigroup - give no geographical breakdowns, spokespeople at the banks in Hong Kong said on Tuesday. Most of the Asia-based jobs at Lehman Brothers, the Wall Street stalwart that collapsed in mid-September, are safe, with Nomura taking over the bank's Asian operations and some 2,600 staff. And job losses on the back of the collapse of Bear Stearns also were limited, as the U.S. bank had only 500 employees in Asia when JPMorgan acquired the collapsed bank. Still, the sheer magnitude of the losses announced by Citigroup late on Monday hit home the message that bankers' jobs in Asia-Pacific are not guaranteed to be safe. As the list of job cuts by international banking giants lengthened in recent months, bankers in cities like Hong Kong, Singapore and Tokyo have grown more and more worried that their relative immunity from the downturn would not last forever. Earlier this month, Australia & New Zealand Banking Group, based in Melbourne, said it would cut more than 500 jobs to contain costs amid the global financial downturn. And DBS, based in Singapore, said it would cut 900 jobs, or 6 percent of its work force, in Singapore and Hong Kong after a steep fall in quarterly profits. Firms like Michael Page, Robert Walters and Profile Search & Selection all report that they have received considerably more résumés from potential job candidates in recent months. David Swan, director financial services at Robert Walters in Tokyo, said: "The vast majority of these CVs have come from people who have already been laid off or from those who see a lay off as imminent. The sentiment of those who are currently employed has become much more conservative and we see very few employed people seeking new opportunities in the finance industry." So far Tokyo has been less affected by job cuts than other major financial centers, mainly because Japanese banks have appeared comparatively healthy. However, Japan and Hong Kong slipped into recession during the third quarter of this year, data over the past week showed, while the sharp fall in the stock markets this year has also taken its toll on Japanese banks' capital adequacy ratios. This prompted Moody's, the ratings agency, to warn last month: "The decline in the equity markets has been very rapid, and if not stabilized, Japanese banking fundamentals may be undermined."   With banks generally not keen to release detailed breakdowns, statistics of the number of job losses in the sector in Asia are hard to come by. Still, Swan estimates that "most of the major foreign institutions in Tokyo appear to have cut around 10 percent of staff numbers, which equates to about 100 to 200 on average per company." Said Matt Robinson, an economist at Moody's Economy.com in Sydney: "As one of the world's financial centers and with the Japanese economy sliding into recession, Tokyo will inevitably feel the effects of the intensifying turmoil in global financial markets." Reforms implemented in the past decade or so have gone some way toward insulating Japanese banks from the problems experienced in the United States and Europe, Robinson said, but there is "emerging evidence that Japanese banks are now coming under pressure, while unemployment in the capital is rising from the multiyear low recorded in mid-2007." A similar story is becoming evident in Sydney and Melbourne, where several financial institutions are making large payroll cuts. The unemployment rate in New South Wales jumped from 4.8 percent to 5.2 percent last month, in part because of the downturn being witnessed in Sydney's financial sector, Robinson said. With all this, there are widespread expectations - in Asia as much as in the United States and Europe - that bonuses will be minimal. "At this stage, most people in the finance industry are expecting little to no bonus for 2008," said Swan at Robert Walters. No wonder that bankers in Hong Kong, Singapore, Tokyo - though still not hit by mass layoffs - have long been reining in spending. " I have been here during the Asian financial crisis, the downturn during SARS and the dotcom bubble bursting, and the feeling is very similar now," said Oliver of the Profile Search & Selection executive search firm. "Only the foolhardy," he said, would not be exploring the job market for alternative employers.