Landlords of large, swanky apartments so favoured by expat bankers are heavily discounting rents and enrolments at international schools are dwindling in Tokyo, as the slow-trickle exodus of Japan’s foreign financial community picks up ahead of the summer holiday season.
Overseas-based financial firms fired about 4,300 people in Japan in the 15 months through March, or about 16 per cent of their combined local workforce [many of the foreigners], Bloomberg reports on Friday, citing Tokyo-based headhunter Executive Search Partners.
But some are exiting in a style much grander than others. ING Groep, now seeking to cut about 250 jobs in Japan, is offering employees about 15 to 20 months’ severance pay, according to Bloomberg, which reports that workers at ING Life Insurance, the Dutch firm’s local life insurance unit, must apply for the plan by July 3.
Some headhunters said the severance package was exceedingly generous, noting that foreign financial companies cutting jobs in Japan have typically offered three to six months of severance pay.
Actually that is the public version. What the headhunters won’t say is that there are a growing number of cases in Tokyo’s foreign financial community - including bankers, traders, IT people - who have extracted impressive concessions from foreign banks to either go quietly or at very least to desist from legal action, ranging from full pay for a year or more to coverage of generous rent and school fee allowances.
We reported last year on KBC’s problems with a feisty group of staff over severance terms, and since then have heard about a few big US banks having similar problems with litigiously-inclined staff. Now, the latest talk is that a disgruntled group of about 25 HSBC employees is considering whether it has a legal case over the bank’s offer of what it considers to be substandard severance packages.
HSBC decided in April to close its Japan stock research and trading businesses, joining UBS, Goldman Sachs and Citigroup in what Bloomberg described as a retreat from the world’s second-largest economy.
Bloomberg says that Citi asked 1,350 employees at its consumer finance unit in Japan to take early retirement in June 2008, offering two months’ pay, as it scaled back its local consumer-lending business. But FT Alphaville has heard that some severance packages being offered by Citi run to more than a year’s pay.
An estimated 30,000 people working at foreign financial firms in Japan may face more cuts as the recession forces companies to merge or form joint ventures, Katsunobu Komizo, Executive Search’s CEO, told Bloomberg.
Indeed, more consolidation is in the pipeline: MUFG, Japan’s biggest bank, is merging its securities arm with the local unit of Morgan Stanley, while Citi is selling its brokerage unit to SMFG and Nomura, Japan’s biggest brokerage, is integrating the Asian and European businesses it acquired last year from Lehman Brothers. And on Thursday came news that Aozora and Shinsei banks are discussing a merger. that would create Japan’s sixth largest bank.
The great irony, in all this, of course - particularly for laid-off workers - is that Japan’s stock markets have been going great guns since March - surging more than 40 per cent since hitting a 24-year low in early March. Not only that, it now looks as though the big banks, led by Citigroup, are moving to improve pay and possibly, other perks for their staff. But not, perhaps, for so many of them in Japan.
Related links:
Sayonara HSBC, Tokyo’s latest hollowing-out story - FT Alphaville
ING to offer 20-month severance pay as it cuts Japan jobs - Bloomberg
HSBC will close equity research, trading in Japan - Bloomberg
Hollowing-out, KBC-Japan style - FT Alphaville
