With the global financial services industry being at the epicenter of our current financial and economic crisis, it should come as no surprise that jobs in this sector continue to take a hit.
Significant additional job cuts are on the horizon for a variety of financial services leaders, with losses this year alone expected to surpass 200,000. This far exceeds the 174,000 cuts that took place in 2009, according to data compiled by Bloomberg’s Businessweek.
And the List Goes On
New York-based Citigroup Inc. is one of the many financial services institutions prepared to begin cuts. According to an unauthorized source, Citigroup is considering laying off as many as 1% of its worldwide workforce, totaling 3,000 or more employees in the next year or so. These cuts are rumored to include approximately 900 from the company’s securities and banking division, serving institutional clients. This new round of cuts follows suit with CEO Vikram Pandit’s plan to continue reducing costs by minimizing certain parts of its workforce.
France’s largest bank BNP Paribas announced that in an effort to trim expenses it will be cutting nearly 6.5% of its investment and corporate banking staff, equating to almost 1,400 job losses, which will largely affect its capital markets and structured-finance teams. According to the bank, these proposed reductions will result in just under 400 job cuts in its domestic trading desk as well.
In an announcement surrounding third-quarter financials, Dutch financial services group ING reported it will cut 2,700 staff, including contract jobs. These cuts will reflect a reduction of 10.5% of its Dutch retail banking operations – laying off 2,000 full-time employees and cutting 700 contract positions.
Milan-based lender UniCredit SpA has also reported a $14.6 billion third-quarter loss, disclosing plans to institute a large-scale capital raising effort. As part of this effort, approximately 6,150 jobs within the organization will be cut by dramatically scaling back its investment banking business.
Less Peripheral Services – A Sign Of The Times
These recent financial services industry cuts, as well as those still on the horizon, are a good indication of what a debilitating effect the European sovereign-debt crisis has had on many of the world’s traditional financial powerhouses.
Therefore, what seems to be a prevalent strategy among these financial giants is to free up much-needed funds by pulling out of peripheral businesses and eliminating resources as opposed to issuing new investor shares.
Perhaps a simple statement from UniCredit’s Chief Executive Federico Ghizzoni sums it up best: “I don’t believe a bank today can do everything anymore. You must choose ‘where to specialize’.”
Key Statistics – Global Banking Market (source: MarketLine)
- As compared to today’s depleting numbers, back in 2009 the global banks sector had grown by 3.3%.
- Despite current conditions, by 2014 the global banking industry is expected to increase 58% from 2009 numbers.
- Representing the largest business line in the global banking industry, bank credit accounts for nearly 60% of its overall value.
- Over 57% of global banks sector value comes from the European sector.