Cerberus, the US private equity firm, is in advanced discussions to close its Hong Kong office in the latest sign of industry giants scrambling to reduce costs amid the global economic slowdown.

People familiar with the matter said Cerberus was planning to close its Hong Kong base less than two years after opening the office with the expectation of a steady rise in China-related business.

Cerberus said on Sunday: “A month ago we took steps to put resources where opportunities are in light of the global financial crisis and changing economic environment, and Hong Kong is no exception to that.”

The US buy-out group has long had a presence in Japan and Taiwan but decided to ramp up its China presence with the opening of a Hong Kong and Beijing office following its hiring of John Snow, the former Treasury secretary, in 2006.

It is unclear whether Cerberus will also scale down or close its Beijing or Taipei offices but the expected closure of its Hong Kong office reflects the need to respond to falling deal activity in the region.

“Barring any late change of mind at Cerberus, I think that closing the Hong Kong office is a done deal,” said one person familiar with the situation.

Mr Snow, chairman of Cerberus, said on a press trip to Asia in 2007 he believed his firm could boost performance at China’s state-owned enterprises and create employment.

He even flagged up a presence in India in the long term.

Since then, Cerberus has been forced to go to the US government with cap in hand seeking a bail-out of two of its biggest portfolio companies: Chrysler, the ailing carmaker, and GMAC, the car finance company.

The buy-out group, named after the three-headed dog that guarded the gates of Hades in Greek mythology, last month took some of its own medicine by unveiling plans to cut 10 per cent of its 275 staff.

Many of the private equity industry’s leading names have started cutting back their footprint in Asia, which they had built up in recent years, attracted by the region’s fast-growing economies.

In December, 3i, the private equity company listed in the UK, announced plans to close its offices in Hong Kong and Shanghai and relocate its China dealmakers to a single office in Beijing.

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