Banks seen shrinking for good as lay-offs near 160,000



Reuters

Published — Friday 16 November 2012

Last update 18 November 2012 2:11 am

| نسخة PDF Print News | A A

LONDON: Major banks have announced some 160,000 job cuts since early last year and with more lay-offs to come as the industry restructures, many will leave the shrinking sector for good as redundancies outpace new hires by roughly two-to-one.
A Reuters analysis of job cuts announced by 29 major banks showed the lay-offs were much bigger in Europe than in Asia or the United States. That is a particular blow to Britain where the finance industry makes up roughly 10 percent of the economy.
The tally of nearly 160,000 job cut plans, meanwhile, is likely to be a conservative estimate as smaller banks and brokers are also cutting staff or shutting up shop, and bigger banks have not always disclosed target numbers of lay-offs.
The tally also does not include reports of 6,000 job cuts to come at Commerzbank, for example, which the German group would not confirm last week.
Well-paid investment bankers are bearing the brunt of cost cuts as deals dry up and trading income falls. That is particularly the case in some activities such as stock trading, where low volumes and thin margins are squeezing banks.
"When I let go tons of people in cash equities this year, I knew most would be finished in this business. It is pretty dead. Some will just have to find something completely different to do," said one top executive at an international bank in London, on condition of anonymity.
The job cuts eat into tax revenues usually reaped from the sector at a time when the global economic recovery is slowing.
This year's tax income from the industry in Britain could drop to around 40 billion pounds ($63 billion) this year, compared to 70 billion in 2007/08, when the financial crisis hit, the Center for Economics and Business Research (CEBR) think-tank said this week.
The job cuts announced since the beginning of 2011 come on top of job cuts already carried since 2009.
Of the 29 banks, from Europe's biggest bank HSBC to US investment bank Morgan Stanley, just over 83,700 net jobs have been lost since 2009, with 167,200 jobs axed and 83,500 created.
Squeezed by regulations forcing banks to store up more capital in their trading businesses, firms are likely to shrink their investment banking units even further, as they overhaul their models to survive.
"It is structural as well as in response to cycles in the market. The market is still over-broked," said Zaheer Ebrahim at recruiters Kennedy Group.
Swiss bank UBS last month outlined a further 10,000 lay-offs after announcing a plan for 3,500 job cuts last year. It said in October it had decided to exit most of its rates and debt trading units.
Workers in retail banking operation will not be immune to job cuts either, particularly in slowing European economies. In France for instance, bank executives predict retail revenues will falter.
"There are still 300,000 too many full-time employees in the top financial services players in Europe," said Caio Gilberti from the financial services practice of consultancy AlixPartners. Gilberti said cutting those jobs could lop just over 20 billion euros off banks' collective cost base.
As banks shrink, fewer of those leaving are able to find equivalent jobs at rivals, head-hunters and bankers said, and only a small proportion of those are qualified to move into other jobs at hedge funds, for instance, which look for specialized, skilled traders.
Mergers and acquisition dealmakers are now also coming under pressure, with fees in that area down 21 percent worldwide to $13.9 billion in the first nine months, Thomson Reuters data showed.
More senior investment bankers are among those in the line of fire. Those ranking as managing directors (MDs), who can command base salaries of around 350,000 pounds ($556,000), are becoming costly to keep — and difficult to take on.
"At MD level, it is tougher to accept smaller jobs, and they do not have the same drive and ambition as the young bankers who have just graduated," Ebrahim from the Kennedy Group said.
Many of those that have enjoyed lucrative careers in the fatter years are instead leaving big banks for good, setting up their own small consultancies or different types of businesses.

What's happening around Saudi Arabia

RIYADH: An explosion damaged several cars at a residential area in the national capital on Monday, but there were no injuries, police said.A spokesman for the Riyadh regional police told Saudi Press Agency (SPA) that security patrols received a tip f...
ABHA: Gov. Faisal bin Khalid bin Abdulaziz, Asir region, ordered the formation of a working team in Bisha to address the status of the battered woman who recently shared her suffering on social networking sites.Mohammed bin Sabrah will head the team,...
MADINAH: Madinah Gov. Prince Faisal bin Salman launched a series of charity and developmental projects during his recent visit to Khaibar Province at costs exceeding SR100 million.They included municipal projects at Khaibar, Al-Salsah and Al-Ashash M...
MADINAH: Pilgrims spend the most beautiful moments in the Prophet’s Mosque, where they pray in Riyazul Jannah (garden from the gardens of paradise) and get to greet the Prophet, peace be upon him, said the Omani pilgrim, Ahmed Nasser. “Such deeds giv...
MADINAH: A member of the Senior Scholars Council, Dr. Abdullah Al-Manieh, has called for the establishment of women’s departments at the Islamic University in Madinah in line with other universities in the Kingdom.“The Muslim woman has had her own st...
JEDDAH: The euphoria over the sudden resumption of call facility on WhatsApp in the Kingdom on Saturday was short-lived as the service was not widely available the following day. A large number of users of the popular messaging service, barring a few...
JEDDAH: Work on developing and modernizing the Kingdom’s 27 airports is ongoing and is expected to be completed within the next five years, according to Sulaiman Al-Hamdan, president of the General Authority for Civil Aviation (GACA).“Our goal is tha...
RIYADH: Saudi Arabia and South Korea are set to widen cooperation in the health care sector following a joint road show which underlined potential areas of cooperation and showcased world-class health facilities of that country. The event, titled “Ko...
RIYADH: The Saudi Green Building Forum (SBGF) believe that about fifty percent of the ongoing eco-friendly green building projects across the Kingdom are facing delays for not fulfilling criteria.Faisal Alfadl, secretary-general of the forum, on Satu...
AL-UQAIR: The low-quality of education in the Kingdom arises from many factors. Included among these are the complexity of the system itself, unclear educational vision, non-professional education development programs, and instability due to changing...
JEDDAH: Security authorities in Jeddah called a citizen and his wife for interrogating with them on the charges of beating their Eritrean housemaid.Makkah Police media spokesman, Col. Dr. Atti bin Attiah Al-Quraishi, said: “The Safety Center of Jedda...
AL-UQAIR: The Saudi Commission for Tourism and National Heritage (SCTNH) has deposited SR600 million with local banks for the Al-Uqair Development Company in Al-Ahsa, SCTNH President Prince Sultan bin Salman has said.“Saudi citizens have some equitie...
JEDDAH: A number of preachers have been arrested for using sermons to promote political ideologies, said Fahad Sulaiman Al-Khalifa of the Ministry of Islamic Affairs.He said the issue was not widespread, and the ministry reiterated that the sermon sh...
JEDDAH: A Saudi military analyst and retired brigadier, Ibrahim Al-Marie, has called for the compulsory drafting of young Saudis into the military.This is, he said, not only because the Kingdom is facing regional threats, but because of its benefits...
RIYADH: Advertisement campaigns for fake TOFEL and ILET certificates are being monitored on social media websites in an effort to halt this illegal practice. The certificates originate from Jordan and can be obtained by clients for a sum of SR2,000,...

Stay Connected

Facebook