American lender Wells Fargo has been shrinking its operations in Hong Kong, downsizing through voluntary redundancy and other measures, sources have told Apple Daily.
The staff reductions appear to be part of the bank’s “efficiency initiatives” implemented last year amid the challenges of the COVID-19 pandemic, sources said. It includes employees who left when the bank’s asset management arm was sold.
At its peak in Hong Kong, Wells Fargo had a local staff of 800 including traders and members of its securities and research departments, according to sources familiar with the situation.
But the American lender has been reducing its presence in Hong Kong in recent years. It launched a voluntary redundancy plan aimed at employees in the sales and loan departments in the fourth quarter of 2020, offering more favorable terms than the minimal requirements under Hong Kong’s labor laws.
Wells Fargo’s regional staff including Hong Kong, mainland China and Singapore has shrunk by about 50 positions, sources said.
In general, Wells Fargo has kept a low profile in Hong Kong since it obtained a license from the Monetary Authority in August 2000. It has focused on corporate loans related to American investment and corporate financing. It does not operate in the retail market and has never been seen as an active player in the local financial market.
In the United States, Wells Fargo was once a favorite of tycoon investor Warren Buffet, who has been cashing out his stake in the lender since last year. It underwent massive job cuts last year, with 6,400 positions axed according to its 2020 fourth quarter earnings report released in January this year. The bank scored a US$3 billion profit in the last three months of 2020, but chief executive Charlie Scharf said more layoffs were coming.
Jobs in Hong Kong were also among the global job cuts, Apple Daily learned, and the bank also closed its research department in the city. But Wells Fargo has no plans to exit Hong Kong, sources said.
Intense competition brought upon by accelerated digitalization in the global banking industry and the COVID-19 pandemic have dented international banks’ income, an analyst told Apple Daily. International banks will likely continue to slash operations in markets that are no longer profitable, the analyst added.
Wells Fargo has yet to reply to Apple Daily’s request for comments.
Wells Fargo may not have a competitive advantage in the Hong Kong and Asia Pacific region, and international expansion has never been part of the American lender’s DNA, said former Citibank veteran banker Chan Tsz-ching. The digitalization of the financial industry has boosted market transparency, and banks can no longer maintain the premium profits of the past, forcing them to adjust their operation plans, Chan noted.
Click here for Chinese version
Apple Daily’s all-new English Edition is now available on the mobile app: bit.ly/2yMMfQE
To download the latest version,
Or search Appledaily in App Store or Google Play