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Wed, Jun 25, 2008 - Page 10 News List

Financial firms may shed up to 175,000 workers


The world’s biggest financial firms may lose as many as 175,000 jobs by this time next year as Citigroup Inc and other banks shed workers amid slowing revenue and billions in writedowns, executive recruiters say.

Financial firms have announced plans to trim more than 83,000 jobs since last July, according to figures compiled by Bloomberg. As more employees are fired, workforce reductions may exceed those from the market slump of 2000 to 2003 when technology-related shares collapsed, recruiters said.

“The worst is yet to come,” Russ Gerson, head of New York-based recruiting firm Gerson Group, said in an interview on Monday.

Major contraction

“We are going to have a major contraction. This is affecting all areas of the investment banking universe and it’s affecting all areas globally,” Gerson said.

Mortgage defaults have caused firms to incur almost US$400 billion of writedowns and losses. New York-based Citigroup, the biggest US bank by assets, has announced more than 13,000 job cuts, about 4 percent of its worldwide workforce. It may shrink further under a plan to trim the trading and investment-banking divisions by 10 percent, said a person with knowledge of the matter.

“For financial services this is about as bad as I can remember,” John Challenger, chief executive officer of Chicago-based outplacement firm Challenger, Gray & Christmas Inc, said in a telephone interview. “The deal flow is not there. You just don’t need as many people.”

Companies have announced more than US$1.5 trillion in merger and acquisition deals this year, a 33 percent drop from the same period last year, data compiled by Bloomberg showed.

About 17 percent of banking and securities jobs in New York were wiped out from 2000 to 2003, the Bureau of Labor Statistics said.

The current round of cuts may claim 35 percent to 40 percent of the industry, said Gary Goldstein, chairman of New York-based financial recruitment firm Whitney Group.

“They just keep chopping heads,” Goldstein said. “They’ll wake up one day and realize that they’ve cut too deep and now these businesses have come back and they don’t have anybody to do them.”

New York-based Bear Stearns Cos is cutting more than 9,000 jobs, or 66 percent of its workforce, as it was acquired by JPMorgan Chase & Co. Zurich-based UBS AG has announced 7,000 job cuts, and Lehman Brothers Holdings Inc has trimmed 6,300 employees.

The Independent Budget Office in Manhattan said in a report issued last month that it expected 33,300 finance jobs in the city, or 7.1 percent of the total, to be cut from the peak last year. The industry lost 52,500 jobs in New York during the 2000 to 2003 market drop.


“Wall Street has a tendency to over-hire in bull markets and over-fire in down markets,” Goldstein said. “This is just another example of that.”

New York has lost 10,000 financial services jobs since last August, a 3.5 percent decline, according to the Bureau of Labor Statistics in Washington. Those figures don’t tell the whole story because employees receiving severance remain on payrolls.

London will suffer 19,225 finance-job reductions this year and next year, or 5.4 percent of the total, according to estimates from the Center for Economics and Business Research in London. That compares with 15,340 jobs, or 4.7 percent, from 2000 to 2002, the center’s data show.

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