Foreign banks in Japan may resume hiring this year to advise local clients taking advantage of the stronger yen to acquire companies abroad, while cutting jobs for other investment banking services, a recruitment firm said.
“Wall Street firms are largely lacking workers for M&A” in Japan after paring staff since the 2008 global financial crisis, said Katsunobu Komizo, chief executive officer at Executive Search Partners Co., the country’s biggest recruitment company focusing on investment banks. “They may lift their hiring freeze sometime soon and recruit people who are good at execution.”
Goldman Sachs Group Inc., Bank of America Corp. and Deutsche Bank AG are among overseas financial firms that cut about 2,000 jobs in Japan since June 2010 as the record earthquake and Europe’s debt crisis roiled markets and dissuaded companies from raising funds. The yen’s advance and a shrinking domestic economy prompted Japanese enterprises to make the most overseas takeovers in more than a decade in 2011.
“Japan’s cross-border M&A activities are outstanding compared with the global trend, and overseas firms can offer their global reach and information,” Komizo, who worked at lenders including Sumitomo Bank Ltd. before joining the recruitment industry in 1989, said in an interview.
Japanese companies made 800 cross-border takeovers last year valued at $89 billion, the most overseas acquisitions since at least 2000, data compiled by Bloomberg show. Goldman Sachs, Credit Suisse Group AG, Deutsche Bank and Citigroup Inc. were among the top five advisers on the deals.
More Global Deals
“We always look for good bankers, especially so as we see more cross-border M&A deals coming through the door,” said Yuichi Jimbo, head of investment banking at Citigroup Global Markets Japan Inc. “As to new graduates, we try to maintain the same level of hires regardless of the cycle.”
Hiroko Matsumoto, a spokeswoman for Goldman Sachs in Tokyo, declined to comment on its hiring policies. Deutsche Bank’s Tokyo-based spokesman Aston Bridgman and Bank of America’s spokesman Takayuki Inoue also declined to comment.
Nomura Holdings Inc., the No. 1 adviser on takeovers involving Japanese companies in 2011, including domestic deals, expects more companies to seek acquisitions offshore.
“We are seeing continued growth in outbound M&A as small and medium-sized businesses across Japan join large corporations in seeking growth abroad,” Kentaro Okuda, Nomura’s joint head of global mergers, said in an interview. “Nomura is looking to build a stronger M&A team to tap into this demand.”
After the Earthquake
Outside of mergers advisory, banks in Japan will continue to trim payrolls amid global cost cutting, said Komizo. As well as Europe’s woes and tighter global regulations, a failure by Japan to overhaul its economy following the March 11 quake and tsunami is a reason for the reduction, he said.
Some 200 overseas banks, hedge funds and buyout firms reduced their Japan staff to 22,000 as of Dec. 31 from 24,000 in June 2010, according to Executive Search.
Business managing share and bond sales in Japan dwindled last year. Equity and equity-linked transactions in the country fell to 1.8 trillion yen ($23 billion) in 2011 from 5.5 trillion yen in 2010, data compiled by Bloomberg show. Japanese companies and institutions sold 13.4 trillion yen of bonds last year, down from 14.7 trillion yen a year earlier.
“Just after the earthquake, people in Japan began saying they should take advantage of the event to turn around the economy,” Komizo said. “It ended up being an empty slogan.”