Europe takes brunt of job cuts in financial sector
Source: Agencies |
November 17, 2012, Saturday
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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 US. 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 closing, 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, 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.
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 40 billion pounds (US$63 billion) this year, from 70 billion in 2007/08, when the financial crisis hit, the Center for Economics and Business Research think-tank said this week.
The job cuts unveiled since the beginning of 2011 come on top of those already carried since 2009.
Of the 29 banks, from Europe's biggest bank HSBC to US investment bank Morgan Stanley, just more than 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 layoffs after disclosing a plan for 3,500 job cuts last year. It said in October that it had decided to exit most of its rates and debt trading units.
A Reuters analysis of job cuts announced by 29 major banks showed the layoffs were much bigger in Europe than in Asia or the US. 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 closing, 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, 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.
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 40 billion pounds (US$63 billion) this year, from 70 billion in 2007/08, when the financial crisis hit, the Center for Economics and Business Research think-tank said this week.
The job cuts unveiled since the beginning of 2011 come on top of those already carried since 2009.
Of the 29 banks, from Europe's biggest bank HSBC to US investment bank Morgan Stanley, just more than 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 layoffs after disclosing a plan for 3,500 job cuts last year. It said in October that it had decided to exit most of its rates and debt trading units.
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