Major banks have announced about 160,000 job cuts since early last year and with more layoffs to come as the industry restructures, many will leave the shrinking sector for good as redundancies outpace new hires by roughly two to one.
An analysis of job cuts announced by 29 major banks showed the layoffs were much bigger in Europe than in Asia or the US.
That is a particular blow to Britain, where the finance industry makes up roughly 10 percent of the economy.
Meanwhile, the tally of nearly 160,000 job cut plans is likely to be a conservative estimate as smaller banks and brokers are also cutting staff or shutting up shop, and bigger banks have not always disclosed target numbers of layoffs.
The tally also does not include reports of 6,000 job cuts to come at Commerzbank, for example, which the German group would not confirm last week.
Well-paid investment bankers are bearing the brunt of cost cuts as deals dry up and trading income falls. This is particularly the case in some activities such as stock trading, where low volumes and thin margins are squeezing banks.
“When I let go of tonnes of people in cash equities this year, I knew most would be finished in this business. It is pretty dead. Some will just have to find something completely different to do,” one top executive at an international bank in London said on condition of anonymity.
The job cuts eat into tax revenues usually reaped from the sector at a time when the global economic recovery is slowing.
This year’s tax income from the industry in Britain could drop to about ￡40 billion (US$63 billion), compared with ￡70 billion in 2007-2008, when the financial crisis hit, the Center for Economics and Business Research think tank said this week.
The job cuts announced since the beginning of last year come on top of job cuts already carried out since 2009.
Of the 29 banks, from Europe’s biggest bank HSBC to US investment bank Morgan Stanley, more than 83,700 net jobs have been lost since 2009, with 167,200 jobs axed and 83,500 created.
Swiss bank UBS last month outlined a further 10,000 layoffs after announcing a plan for 3,500 job cuts last year. It said it had decided to exit most of its rates and debt trading units.
Workers in retail banking operations will not be immune to job cuts either, particularly in slowing European economies. In France for instance, bank executives predict retail revenues will falter.
“There are still 300,000 too many full-time employees in the top financial services players in Europe,” said Caio Gilberti from the financial services practice of consultancy AlixPartners.
Gilberti said cutting those jobs could lop just over 20 billion euros (US$25.5 billion) off banks’ collective cost base.