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US banks cut APAC bonuses dramatically.

Citi beat US rivals amid Asia investment banking pain

Amid the gloom of weak earnings and a slump in bonuses at US banks, Citigroup’s CEO Jane Fraser remains optimistic about the outlook for China.

“There’s an important recovery that’s going to occur in Asia,” Fraser told analysts after announcing the bank’s fourth quarter earnings earlier this month.

Fraser’s optimistic outlook is based on China emerging from Covid lockdowns, resulting in a dramatic uptick in corporate finance activity.

Among the US banks that disclose their earnings in the Asia-Pacific region, Citi bucked the trend. It’s institutional clients division posted a 3% rise in revenues to  $8.6bn. The division includes its treasury and cash management businesses, as well as traditional investment banking.

By contrast, Goldman’s APAC revenues fell 23% to $5.8bn, putting it at the bottom of the back behind Morgan Stanley, which reported a 10% drop in revenues to $6.7bn.

Bankers' poor performance in APAC has been reflected in bonuses, with sources saying that Citigroup pay was down by a third on average across APAC banking, while the decline was closer to 40% at Goldman. Although Morgan Stanley’s business performed better, sources said that in some areas of capital markets total compensation was down by as much as 50%, with the bank paying a larger number of ‘zero’ bonuses compared with rivals.  “Everyone at Morgan Stanley was hard hit regardless of their revenue numbers,” said one headhunter in Hong Kong.

Both Morgan Stanley and Goldman cut staff in China as part of their annual headcount reduction, while Goldman has made additional redundancies as part of a group-wide move to slash headcount by 6%.

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