(Reuters) – Major banks have announced some 160,000 job cuts since early last year and with more layoffs 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 layoffs 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 layoffs.
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 thisbusiness. 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 Centre 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 U.S. 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.
Reuters has the full article
