UK finance industry braces for big layoffs
Source: Bloomberg News |
January 22, 2013, Tuesday
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THE UK's financial industry will lose 43,000 jobs in six months, according to a forecast from the Confederation of British Industry, as companies shrink and reduce costs.
Banks, insurers, asset managers and other finance firms probably cut 25,000 positions in the last three months of 2012 and may eliminate 18,000 jobs in the first quarter of this year, according to a study by Britain's biggest business lobby group and PricewaterhouseCoopers LLP, published yesterday.
Global cuts at financial firms have exceeded 115,000 since 2012 as they seek to control compensation expenses and retreat from capital-intensive businesses, according to data compiled by Bloomberg News. Morgan Stanley, with securities operations in London, plans to eliminate about 1,600 jobs from its investment bank and support staff in the coming weeks, a person with direct knowledge of the matter said on January 9. New York-based Citigroup Inc said in December that it will cut more than 11,000 jobs and pull back from some emerging markets to curb costs.
"What you are seeing is exiting of certain product lines, geographies or restructuring their activities, on the other end you have demands on them for regulation," said Kevin Burrowes, UK financial-services leader at PwC.
Tougher capital requirements mean banks such as Zurich- based UBS AG are shrinking risk-weighted assets at their securities units. HSBC Holdings Plc, Europe's biggest bank, has sold businesses to improve profitability and Barclays Plc said it may trim operations that don't return enough profit or harm its reputation.
The CBI's forecast compares with its October estimate for third-quarter job losses of 9,000.
In the fourth quarter, numbers employed fell for the third consecutive quarter, with the rate of decline picking up once again, the CBI said in the report today. "Staff turnover increased more strongly than expected and than in the prior quarter, while staff costs as a proportion of total costs fell and are expected to contract at a faster pace next quarter."
The cuts in the UK industry will mean about 132,000 financial-services jobs have been lost since the peak in the final quarter of 2008, when it employed about 1 million people, the CBI said.
In addition to firings, bankers have been retiring earlier and younger would-be recruits are shunning finance for less-tainted industries, said Burrowes.
Banks, insurers, asset managers and other finance firms probably cut 25,000 positions in the last three months of 2012 and may eliminate 18,000 jobs in the first quarter of this year, according to a study by Britain's biggest business lobby group and PricewaterhouseCoopers LLP, published yesterday.
Global cuts at financial firms have exceeded 115,000 since 2012 as they seek to control compensation expenses and retreat from capital-intensive businesses, according to data compiled by Bloomberg News. Morgan Stanley, with securities operations in London, plans to eliminate about 1,600 jobs from its investment bank and support staff in the coming weeks, a person with direct knowledge of the matter said on January 9. New York-based Citigroup Inc said in December that it will cut more than 11,000 jobs and pull back from some emerging markets to curb costs.
"What you are seeing is exiting of certain product lines, geographies or restructuring their activities, on the other end you have demands on them for regulation," said Kevin Burrowes, UK financial-services leader at PwC.
Tougher capital requirements mean banks such as Zurich- based UBS AG are shrinking risk-weighted assets at their securities units. HSBC Holdings Plc, Europe's biggest bank, has sold businesses to improve profitability and Barclays Plc said it may trim operations that don't return enough profit or harm its reputation.
The CBI's forecast compares with its October estimate for third-quarter job losses of 9,000.
In the fourth quarter, numbers employed fell for the third consecutive quarter, with the rate of decline picking up once again, the CBI said in the report today. "Staff turnover increased more strongly than expected and than in the prior quarter, while staff costs as a proportion of total costs fell and are expected to contract at a faster pace next quarter."
The cuts in the UK industry will mean about 132,000 financial-services jobs have been lost since the peak in the final quarter of 2008, when it employed about 1 million people, the CBI said.
In addition to firings, bankers have been retiring earlier and younger would-be recruits are shunning finance for less-tainted industries, said Burrowes.
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