Jobs are on the minds of many people this Labor Day.
The holiday that traditionally marks the end of the summer also caps a long season of layoff announcements in the financial sector. Over the summer some of the world’s biggest banks have announced that they are cutting jobs, and lots of them.
According to Moody’s Analytics the banking industry will lose about 3,500 jobs by the end of this year. But big banks have plans to cut many more over the next three to five years.
The lagging economy is to blame. Lending (a driver for bank revenue) is slow and Wall Street trading is sluggish. Also, all of that government aid that helped prop up banks is dwindling. On top of it all, banks are facing new regulations that they fear will dig into profits.
So financial institutions are looking to become leaner. And as they look for places to cut costs, the payroll is usually one of the first places to slash. Pretty much no bank is immune to this. Practically all of them are cutting costs in order to help profits. Some are making big layoff announcements, while others are quietly trimming around the edges.
Probably the biggest job cuts will come from the UK’s HSBC, which announced last month that it would eliminate 30,000 jobs by 2013. Also in the UK Lloyds Banking Group plans to reduce its numbers by about 15,000. Credit Suisse is trimming 2,000 employees from its ranks. Dutch bank ABN Amro announced that it will cut 2,300 jobs (9% of its workforce) over the next three to four years. And Swiss UBS announced 3,500 layoffs or 5% of its workforce.
In the US job-cutting is only a part of banks’ belt tightening efforts. Some banks have created names for their programs aimed at eliminating redundancies and creating efficiencies. Bank of America is reducing staff by 3,500 (with more expected to come) as part of its Project New BAC.
Wells Fargo also has a snazzy name for its cost-cutting efforts — “Project Compass.” The bank (which hasn’t proclaimed any major layoff plans) aims to cut $1.5 billion in quarterly expenses by the end of 2012. JPMorgan Chase has a five-year plan to save $1.3 billion a year by streamlining trading after its acquisition of Bear Stearns.
Other banks have already seen benefits from their efficiency initiatives. KeyCorp’s ”Keyvolution” project was so successful (saving some $317 million) that it has become a part of the bank’s normal operations.
~