Banks had massively rehired after layoffs related to Lehman Brothers’ bankruptcy; today they believe their expenses are too high. Facing sluggish growth and questionable incomes, they feel forced to lay off!
Dutch bank ABN Amro announced on Friday it would cut nearly 2,350 jobs, about 9% of its workforce. Nationalized during the crisis, the bank is preparing to be either sold or face an IPO. 1,500 people will be laid off and 850 positions will be suppressed over the next three to four years. While most of these jobs are back-office operations related, some positions in the fields of retail banking and BFI will also be concerned. A provision of 200 million euros before tax has been made to finance the restructuring said ABN Amro.
A week ago, UBS announced the elimination of 3,500 positions, almost half of them in BFI, in order to save about two billion francs (1.76 billion euros) by the end of 2013. The reductions will affect the following divisions: Investment Bank (45%), Wealth Management & Swiss Bank (35%), Global Asset Management (10%), Wealth Management Americas (10%). UBS beats Credit Suisse, which had planned to save one billion euros by cutting 2,000 positions.
Before UBS, ABN Amro and Credit Suisse, HSBC (30,000 jobs cut), Barclays (3000) and Goldman Sachs (1000) had already announced massive job cuts in recent times.
"Banks had massively hired in investment banking after the crisis due to Lehman Brothers in 2009, but mostly they had massively increased wages, sometimes doubling or tripling them in order to compensate decreasing cash bonuses and unfavorable new regulations related to variable contracts" said Paul Henry, an analyst at City. "Especially, banks were unable to regain market share, and with today’s falling incomes, they eventually came to realize that their expenses were just too high," he says.
Expert in derivatives Goldman Sachs had innovated by developing contracts with raised salaries for two years. Conservative by nature, the bank had thus the option to renegotiate those raises depending on the results of each activity. Given the declining revenues, the clause will not be in favor of the employees, since Goldman will adjust wages that were increased in fall 2009 to the actual market level.
Silence reigns over the French market! French banks provided no answer whatsoever about their future management of human resources. Their situation do not seem however to be much better than the English or Helvetian. Wait and see!
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