More layoffs likely next year at big banks in US, Europe

Barclays, one of Europe's biggest banks, will unveil job cuts when it announces strategies designed to strip 10 to 20 per cent of the costs at its investment bank, sources told Financial Times. Barclays' chief executive is expected to announce the ba
Barclays, one of Europe's biggest banks, will unveil job cuts when it announces strategies designed to strip 10 to 20 per cent of the costs at its investment bank, sources told Financial Times. Barclays' chief executive is expected to announce the bank's fresh strategy and plans to move quickly to shrink its investment bank, which employs about 20,000 people, in March next year. PHOTO: AGENCE FRANCE-PRESSE

LONDON • The wave of layoffs since 2007 by big banks in Europe and the United States is showing no signs of abating, as thousands more job cuts are expected early next year, in addition to the 100,000 new job cuts this year.

This year's cuts - which exclude the impact of major asset sales - amount to more than 10 per cent of the total workforce across the 11 large European and US banks that announced fresh layoffs, according to the Financial Times.

Dutch lender Rabobank was the latest to announce last week that nearly 9,000 heads were to roll across the bank.

Its announcement came a day after Morgan Stanley announced 1,200 layoffs.

Analysts believe more banks are expected to make similar announcements next year as revenue, rates and regulation will drive further staff reduction.

Barclays and BNP Paribas, two of Europe's biggest banks, will unveil job cuts when they announce strategies designed to strip 10 to 20 per cent of the costs at their investment banks, sources told Financial Times.

Barclays' chief executive is to announce the bank's annual results on March 1 next year, the day he is also expected to announce the bank's fresh strategy and plans to move more quickly to shrink its investment bank, which employs about 20,000 people. Barclays declined to comment.

BNP Paribas' new corporate and institutional banking chief, Mr Yann Gerardin, will announce a new cost cutting plan in February. The French bank has already said it is planning to cut more than 1,000 jobs in its Belgian retail network.

Analysts believe more banks are expected to make similar announcements next year as revenue, rates and regulation will drive further staff reduction.

Banks under new leadership - such as Deutsche Bank, Credit Suisse and Barclays - have been under scrutiny as incoming chief executives try to turn their fortunes around into more profitable companies demanded by investors.

"I don't think we can rule out the end of job cuts until RoEs (return of equity) recover to acceptable levels," said Mr Jon Peace, banks analyst at Nomura.

"Digital transformation could also be a driver of further headcount reduction longer term, with retail banks cutting branches in favour of online services and investment banks cutting back offices in favour of online technologies such as blockchain."

Mr Mike Mayo, banking analyst at CLSA, said that even though US banks announced fewer cuts than European lenders this year, their employees are still at risk next year.

US banks were also feeling the pressure of "the worst decade of revenue growth since the Great Depression", he said.

According to census data, US banks and insurers cut almost 400,000 jobs during the first five years of the financial crisis, while Europe's 30 largest banks, by market value, cut more than 80,000 jobs between 2008 and last year, according to data published by the banks.

A version of this article appeared in the print edition of The Straits Times on December 15, 2015, with the headline 'More layoffs likely next year at big banks in US, Europe'. Print Edition | Subscribe