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Travel economy class, i-banks tell top brass

Travel economy class, i-banks tell top brass
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First Published: Wed, Oct 22 2008. 11 03 PM IST
Updated: Wed, Oct 22 2008. 11 03 PM IST
Hong Kong: Investment banks Merrill Lynch and Co. Inc., UBS AG and JPMorgan Chase and Co. are telling senior bankers in Asia to fly coach on short-haul flights and reduce non-essential travel as they step up cost cuts, officials at the firms said.
UBS advised bankers this month to travel economy class for flights of up to five hours, two officials at the biggest Swiss bank said, asking not to be identified because it’s an internal policy. Merrill employees have been told to travel economy for flights of as much as three hours since mid-September, two executives at the firm said.
The world’s largest banks and securities firms are trimming costs to survive the credit market meltdown that toppled Lehman Brothers Holdings Inc. and forced Merrill Lynch to sell itself to Bank of America Corp. The financial services industry has cut more than 140,000 jobs since a surge in subprime mortgage delinquencies began to roil global debt markets in 2007.
“Investment banking has almost disappeared in this market, and with revenue shrinking severely, it’s sensible to cut every single type of cost they can,” said Renault Kam, a senior portfolio manager at Atlantis Investment Management Ltd in Hong Kong, which oversees $5 billion (Rs24,650 crore). “We haven’t seen the worst yet.”
JPMorgan, the biggest US bank, has requested senior bankers fly economy on flights less than three hours since late August, said an official, who declined to be identified.
HSBC Holdings Plc.’s Asia unit asked its Hong Kong department heads and branch managers to cut travel expenses by 15-20% next year, two officials at the bank said, citing a 23 September memo sent by chief executive officer Jon Addis.
HSBC is recommending lower-cost China Eastern Airlines Corp. Ltd, the country’s third biggest carrier, over Hong Kong Dragon Airlines Ltd for business trips to Shanghai, the memo said, according to the people. Europe’s biggest bank by market value cut 1,100 jobs in its global banking and markets division last month.
A round-trip business class ticket from Hong Kong to Shanghai with Dragonair costs HK$6,110 (Rs39,776) excluding tax, almost double the best coach fare. An economy class traveller at China Eastern pays HK$2,650.
Cathay Pacific Airways Ltd, Dragonair’s parent, reported the first drop in traffic in 20 months and said demand out of Hong Kong “slowed significantly”. Singapore Airlines Ltd, the world’s biggest carrier by market value, also recorded declines in traffic.
Merrill, following its emergency sale to Bank of America, plans to cut about 500 jobs in its trading division, three people with knowledge of the plan said on 21 October. About 75 of those positions will be in Asia, said a bank official, who declined to be identified.
“UBS always seeks to control its costs,” said Chris Cockerill, a Hong Kong-based spokesman at the firm. “In the current financial environment, we are reviewing all potential areas where greater savings can be made, and travel is one of them.” He declined to elaborate. Rob Stewart, a Hong Kong-based spokesman at Merrill, declined to comment.
London-based HSBC has asked its bankers to use video conferencing to replace business trips when possible. Travellers for corporate training or internal meetings are required to book economy seats, spokesman Gareth Hewett said.
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First Published: Wed, Oct 22 2008. 11 03 PM IST