Big banks in Europe and the US announced almost 100,000 new job cuts this year, and thousands more are expected from BNP Paribas and Barclays early next year, as the wave of lay-offs that began in 2007 shows no sign of abating.
The 2015 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 lay-offs, according to analysis by the Financial Times.
The most recent came last week, as workers at Dutch lender Rabobank learnt of 9,000 cuts across their bank the day after Morgan Stanley announced 1,200 lay-offs, including at its ailing fixed income division.
Barclays and BNP Paribas, two of Europe’s biggest banks, will unveil job cuts when they announce strategies that are designed to strip out 10 to 20 per cent of the costs at their investment banks, people familiar with the situations said.
At Barclays, the axe will fall on March 1 when chief executive Jes Staley unveils a fresh strategy with the bank’s annual results. The announcement will include Barclays’ plans to move more quickly to shrink its investment bank, which employs about 20,000 people.
Barclays declined to comment.
BNP Paribas’s new corporate and institutional banking chief Yann Gérardin 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.
Banks have found that they have been carrying too many staff, as they suffer falls in revenues from a combination of tougher post-crisis regulation, ultra-low interest rates and sluggish activity among clients.
Those under new leadership — such as Deutsche Bank, Credit Suisse and Barclays — have been under particular scrutiny, as incoming chief executives try to turn the ailing banks they inherited into the more profitable companies demanded by investors.
Analysts believe 2016’s misery could be more widespread than just those two banks. New regulations mean all banks must hold more equity, and that means they have to earn higher profits to keep return on equity at the levels investors demand.
“I don’t think we can rule out the end of job cuts until RoEs recover to acceptable levels,” said Jon Peace, London-based 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.”
Mike Mayo, New York-based banking analyst at CLSA, said that even though US banks announced fewer cuts than European lenders this year, their employees are still at risk in 2016.
“The additional electronification of the security markets should result in an ongoing swap of capital for labour . . . more machines over people,” he said, adding that US banks were also feeling the pressure of “the worst decade of revenue growth since the great depression”.
US banks and insurers cut almost 400,000 jobs during the first five years of the financial crisis, US census data show; Europe’s 30 largest banks by market value cut more than 80,000 jobs between 2008 and 2014, according to data published by the banks.