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Global banks shrink S’pore office space

SINGAPORE — More and more international banks are giving up office space in Singapore, as revenue and profitability come under pressure amid stricter global banking rules and foreign labour restrictions that increase competition for local workers and make it more expensive to hire them.

SINGAPORE — More and more international banks are giving up office space in Singapore, as revenue and profitability come under pressure amid stricter global banking rules and foreign labour restrictions that increase competition for local workers and make it more expensive to hire them.

Global banks have vacated about 500,000sqf of leased space since 2011, enough to seat 3,800 employees, estimates by Jones Lang LaSalle Property Consultants showed. About 80 per cent of that is in the central business district, data tracked by the real estate broker revealed.

Said Mr Chris Archibold, Jones Lang LaSalle’s Singapore head of markets: “The banking industry is undergoing a huge amount of change, especially around its capital-intensive businesses, which means there are fewer jobs.

“Globally and locally, there have been various bits and pieces put in place by various governments that have drastically affected the banks.”

Singapore is Asia’s biggest wealth management hub and overtook Japan last year as the region’s largest foreign-exchange centre.

But a four-year campaign by the Government to restrict the hiring of foreigners has increased competition for local workers and made it more expensive to recruit them — dissuading banks from adding back-office staff, said Mr Archibold.

Revenue and profitability have also come under pressure amid tighter banking rules that have been implemented since the global financial crisis, forcing firms to cut costs and reduce payrolls. Banks worldwide have announced more than 500,000 job cuts in the past four years, Bloomberg data showed.

Barclays, the United Kingdom’s second-largest lender, has given up two storeys of prime office space at the Marina Bay Financial Centre (MBFC) that has since been leased by LinkedIn, people familiar with the matter said this month.

The bank has been shuffling its real estate space in Singapore, moving employees from suburban offices to the Marina Bay area to cut costs.

It will terminate its lease on about 15,500sqf of office space in a building in Tampines and relocate the employees to the 290,000sqf of space it occupies at MBFC by July, people familiar with the matter said last month. This comes after it exited 29,000sqf of office space in Changi Business Park earlier this year. The bank has another 96,000sqf at One Raffles Quay, revealed data provided by the bank in September 2012.

Credit Suisse is also planning a phased exit from its One Raffles Quay office space this year, a person with knowledge of the matter said. It is also seeking replacement tenants at some of its leased office space in Changi, the person added.

“Credit Suisse continually reviews its real estate strategy in line with the needs of its businesses,” said spokeswoman Juliette Leong. “Singapore is the largest regional hub for its business and back-office support, and (the firm) remains very committed to its presence in this market.”

Barclays declined to comment. The bank had 3,500 full-time employees in Singapore in October last year, down from 4,700 about a year earlier.

“While some financial institutions have relocated some lower-end roles in their middle and back offices out of Singapore due to cost reasons, they are also retaining and growing higher value-added activities here,” the Ministry of Manpower and Monetary Authority of Singapore (MAS) said in a joint statement in response to queries.

The MAS has been working with the financial community to raise the competencies of the local workforce because having a critical pool of qualified professionals is a key attraction for global banks to keep their operations in the city-state, the statement said.

Not all banks are trimming space, with United States lenders among those expanding their footprint on the island. The vacated space is also not expected to have a material effect on rents because it is a fraction of the 64 million sqf of office area available for leasing in Singapore, Mr Archibold said.

Citigroup, whose 10,000 employees across Singapore make it the largest employer among foreign banks, occupies more than 1 million sqf, up from 981,000sqf at the end of 2006, said spokesman Adam Abdur Rahman.

For Goldman Sachs Group, the largest prime broker in Asia, its Singapore real estate occupancy is the highest ever, said Mr Edward Naylor, a Hong Kong-based spokesman. The bank is considering plans to occupy more space, he said, without elaborating.

“The regulatory environment for banks in Europe appears to be harsher than it is in the US,” said Mr Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia, citing pressure ranging from capital requirements to political debate on profits. “The US banks are frankly just lucky.”

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