France’s BNP Paribas Trims Staff in China Amid Slowing Deal Activity
Slowing Economy and Regulatory Scrutiny Take Toll on Banking Industry
In a move to adapt to the shifting landscape of China’s financial market, BNP Paribas has cut around a dozen jobs in mainland China and Hong Kong, according to a source familiar with the matter. The French bank’s decision is the latest in a series of staff reductions by global investment banks, as they grapple with a slowdown in dealmaking in the Chinese market.
Impact on Investment Banking and Corporate Finance Roles
The majority of the affected bankers hold investment banking and corporate finance positions, with most of them based in BNP’s mainland Hong Kong and China offices. Prior to the cuts, these offices had around 100 employees focused on China-related deals.
Global Banks Scale Back Operations in China
This development is part of a broader trend, as global investment banks have been reducing their staffing on China business over the past two years. The slowdown in China’s economy, coupled with increased regulatory scrutiny of corporate dealmaking and fundraising, has dampened the market’s revenue potential.
China’s Stimulus Policies Fall Short of Expectations
While there were high hopes that China would introduce strong stimulus policies to boost share sales, the measures implemented so far have been weaker than anticipated. As a result, initial public offering launches have not seen the expected surge.
Decline in China Equity Capital Markets Deals
According to data from LSEG, banks raised $41.5 billion from China equity capital markets deals in the first three quarters of 2024, a staggering 62.5% decline from the same period last year. This marks the lowest first three-quarter total since 2008.
BNP Paribas’ Limited Deal Activity in Hong Kong
In the first nine months of this year, BNP worked on only one Hong Kong equities deal as a bookrunner, a $6.5 million fundraising. This ranks the bank 31st among 32 bookrunners, highlighting the challenges it faces in the region.
Industry-Wide Decline in Investment Banking Fees
The decline in deal activity has also led to a decrease in investment banking fees. An estimated $9.1 billion worth of fees were generated in China during the first three quarters of 2024, a 25% decline compared to the same period last year, according to LSEG.
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