Securities firms in China have cut staff amid poor stock market performance. (Photo/CNS)
China's securities industry saw sharp reductions in business volume last year, with eight firms reporting average salary cuts of close to 30% and several others having laid off staff.
By the end of 2011, the total value of China's A-share market — which can mainly be traded on by Chinese citizens only — had fallen by 25% from levels seen earlier in the year. The Shanghai and Shenzhen 300 index fell by 25.7% and daily business turnover for the A-share market registered a 26% year-on-year drop.
Net profits in the securities industry had fallen by roughly 50% year-on-year by the end of 2011. The pressure placed on securities firms increased significantly alongside the malaise. Trimming costs became a common practice among these companies, with rumors of salary reductions and layoffs spreading quickly.
"Various securities firms are operating at a loss, forcing them to cut costs by reducing expenditures," an industry worker said.
This statement was confirmed by the many listed firms' 2011 annual financial statements, which showed expenditure cuts. By March 30, average salaries at eight listed securities companies dropped by 36.1% from the year before, according to the financial reports. The report released by Sealand Securities, for example, saw employee salaries payable cut by 61.58% from 2010 to 2011.
Downsizing may have been inevitable. Significant changes in the size of staff have taken place at a wide range of firms, the annual reports showed. Sealand Securities' showed that it had 7,294 employees as of Dec. 31, 2011, a significant drop from the 8,846 posted in its 2010 report.
The layoffs are also part of a wider trend toward a change in firms' business operations. While several securities firms saw the number of dealers drop considerably, staffers at investment banks and in information management departments have grown.
Nevertheless, 50 companies in the industry suffered losses in the first three quarters of 2011, with some planning salary reductions. An analyst at a securities firm said average salaries for his company's employees in 2011 were reduced by around 20%. Several firms did not pay year-end bonuses in 2011, and others reportedly imposed salary limits.