Big Wall Street and European banks are looking to slash budgets across Asia, as the emerging market promise is trumped by an urgent need to control costs.From taxi and air fares and year-end parties to entire operational divisions and new country offices, little is sacred.

The age of headquarters in New York or London subsidizing investment banking expansion in Asia is giving way to a period of austerity - a shift the industry accepts is long-term, especially given a steep drop in Asia fee income late last year compared to the rest of the world.

The cost cutting goes beyond standard headcount reductions, scything deep inside banks, where whole product teams are being closed down, entire offices are under review, and travel and entertainment budgets are pared to the bone.Hiring is sparse, with pressure from bank headquarters to first show results for those who joined in the past two years.

Division heads are no longer chasing every deal, and instead have to be much more selective.“The heyday of just expanding and taking people wholesale is over,” said Enid Yip, Asia Chief Executive at Swiss private bank Sarasin. “People will have to start looking very closely at their own contribution to the P&L (profit and loss).”In Asia, estimated fee volumes slumped 43 per cent in October-December, the biggest drop of any region, though the others were not far behind.

With Asia excluding Japan accounting for only 15 per cent of the global fee pool, any continued fall on last year’s scale just damages the Asia proposition further.“Last year, a $1 billion deal turned into $300 million, if it went through at all. A $10 million fee suddenly became $1 million. We have to be more selective about where we put resources,” said an Asia head at one U.S. investment bank.

Bank of America-Merrill Lynch is shedding a fifth of its investment banking managing directors in Asia this quarter, and is pooling some analysts and associates to respond to business that is critical, rather than have them in specific teams, sources have said.Credit Suisse is closing its Taiwan fixed income operations, and Macquarie closed part of its equity derivatives division in Hong Kong in the fall.

Spanish bank BBVA, which was expanding rapidly until mid-last year, has cut about a third of its wholesale banking staff in Asia, and Morgan Stanley has chopped fixed-income jobs in Singapore and Hong Kong, sources told Reuters. The abrupt exit of Jesse Bhattal from Japanese brokerage Nomura Holdings, announced this week, helps underscore the point. Bhattal led Lehman Brothers and Nomura at a time of heady expansion and leaves now when the growth period is ending.

The Daily Independent/Bangladesh/ 13th Jan 2012