Moody’s has closed its consulting operation, Moody’s Analytics, in China and is firing local employees on short notice.
Moody’s told the Financial Times that it made adjustments based on current and predicted economic trends. However, the firm will keep its credit ratings business in the country.
The U.S.-based company states, “Moody’s continues to maintain a strong presence in China and contribute constructively to China’s sustainable growth and the further development of its domestic markets.”
Sources said the rating agency planned to reduce its operations in mainland China and cut its physical presence internationally.
It is estimated that Moody’s has let go of more than 100 employees in its Beijing, Shanghai, and Shenzhen offices in tandem with the closure. Sources told the Times staff received the bad news via a Zoom business update meeting. The decision even took senior personnel off guard.
Moody’s ex-employees said the shutdown was unprecedented, considering the profits generated by the global risk management industry.
Moody’s Analytics enjoyed a 14% increase in revenue to $685 million in the third quarter of 2022 compared to the same period last year.
One of those fired on November 16 said, “It happened completely out of the blue. We had just launched a new China-focused product, ‘Risk Compass,’ in May, and our revenues and performance were still gaining momentum.”
The person said the instantaneous decision would hurt Moody’s standing with mainland clients and deal a blow to its market.
The management team from Moody’s Corporation had warned in October that it would cut some global positions following poor revenues during the second and third quarters. They, however, did not mention a potential eradication of the mainland analytics business.
Moody’s Investors Service, its rating division, has generated only $590 million in the third quarter of this year, down 36% from the prior year. The Times attributed the cause to the dramatic drop in global debt issuance, persistent inflation, and geopolitical concerns.
One person told Reuters that Moody’s decision coincides with China’s increasing preference for homegrown suppliers in the banking industry.