The major banks continue to reduce their payrolls. In first-quarter earnings announcements, Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley revealed that they have slashed more than 31,000 jobs, or 3.5 percent of their combined workforce, in the past year. For three of those banks, it was the second straight year of cutbacks. This pattern is being repeated at banks globally.
These job losses are a reminder of
the meltdown and its lingering effects.
A slow, halting recovery has reduced
the demand for loans. Low interest rates are weakening profits from lending.
New regulations have extinguished old sources of revenue, and compliance is
expensive.
The cuts also reflect advances in
technology that have made retail banking staff more expendable as customers get
increasingly comfortable banking online or by Smartphone.
The mantra in the banking industry is
cost cutting. The CEO of Citigroup
comments that examining costs and
improving efficiency should be "business as usual" and "not just
an annual event."
It's a far different mood from the
pre-crisis years that were fueled by risky trading and complicated investments
that eventually backfired.
Now Citigroup is cutting back in troubled
countries in the Euro zone such as Greece and Spain.
Germany's Commerzbank and others are
laying off branch workers as customers gravitate toward online banking.
Barclays is exiting businesses with "reputational risks" after some
of its bankers were caught manipulating global interest rates.
There are areas where banks are
seeking to add staff. For example wealth management perceived as a steady
source of income, based mostly on fees, rather than the spectacular gains and
losses associated with trading.
Banks are also actively recruiting
compliance workers, to help ensure they're in line with stricter regulations
that came out of the financial crisis.
Antony Jenkins, appointed CEO of
Barclays last year after the bank's interest rate-fixing scandal, in February
laid out a turnaround plan that included exiting risky businesses, cutting jobs
and slashing the proportion of revenue that the bank spends on salaries and
bonuses.
"We need to accept," he
says, "that society's expectations have changed."
It’s taken some time but maybe at
last the banks are getting it.
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