Och-Ziff Capital Management has laid off as many as a dozen people in the Hong Kong office and has reduced teams in other regional offices as well, according to people who know the firm.

Calls to the Hong Kong office were not returned.

Zoltan Varga remains in charge of the region but the number-two ranked person in Hong Kong, Raaj Shah, has been let go. Shah was executive managing director and a partner, and had led the firmÆs credit team in Asia. In particular he had spearheaded investments in distressed situations.

Two other distressed debt people have been laid off: Mary Schroder, who had joined the firm at the beginning of the year from Asian Debt Management, and Oliver Wimmer, formerly of Lehman Brothers.

Och-Ziff is reportedly not the only hedge fund slashing its Asian distressed debt teams. The big US hedge funds believe they can find the same situations in the US without the legal uncertainties common in China, Indonesia and other Asian jurisdictions. Citadel Group has also just canned its special situations team in Hong Kong, which had been led by ex-Credit Suisse veteran Nick Taylor.

Och-Ziff has also cut people in Hong Kong from its convertible bond arbitrage and equity long/short teams, but it continues to maintain these businesses here, and still has a big (16-person) equity hedge team in place. It also maintains a credit book.

Moreover, the firm reportedly is retaining three people it recently hired to build a real-estate portfolio: Zain Fancy, Roy Kwok and Annan Madduri still have jobs.

The firm is also trimming generalists from offices in Bangalore, Beijing and Tokyo.

A company spokesman would not comment beyond a prepared statement: "We manage our business in relation to the opportunities we believe will have the most value to our fund investors and shareholders. We have and will continue to selectively reconfigure personnel with both the opportunity set and global economic conditions in mind. We have made some minor reductions in Asia, and we remain committed to the region."

Citadel has just binned its equities and distressed teams, and its senior executives û Taylor and MD Tim Throsby û have been dismissed. This would appear to leave David Knowles as the most senior person still at the firm; he heads up private and illiquid investments.

Other US hedge funds that have reported shuttered or downsized Asian operators are Dallas-based HBK Investments (the largest shareholder of the bankrupt Circuit City), San Francisco-based Polygon Capital (whose website is ôunder constructionö), New York-based Ramius Capital and, in Singapore, Honolulu-based Diamond Head Capital Partners.

Nor are the Yanks the only ones in trouble: the market is full of rumours about UK-based Cheyne Capital, with reports that the five-strong team in Hong Kong has been passing their CVs around.

Simon Osborne contributed to this story.