The bloodletting in the financial-services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by the middle of next year, said Brian Sullivan, chief executive officer of search firm CTPartners.
Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, Sullivan, whose firm has worked with Citigroup Inc and JPMorgan Chase & Co, said in an interview. Banks, brokerages and funds have eliminated about 170,000 positions worldwide.
“This is the financial equivalent of World War II,” Sullivan said. “It’s unprecedented. You’re seeing a seismic shift in the population of banking.”
Banks are racing to cut jobs from New York to Sydney as frozen credit markets cause revenues to tumble and the financial industry tries to digest almost US$1 trillion of writedowns and losses. The worst financial crisis since the Great Depression will reshape the investment banking industry, as firms lose the ability to use leverage to boost returns, Sullivan said.
“Without the massive leverage that’s been in the system, the business of some of these big investment banks simply isn’t going to be there,” he said.
Following the collapse of Lehman Brothers Holdings Inc, other firms like Goldman Sachs Group Inc and Morgan Stanley have converted themselves into bank holding companies regulated by the Federal Reserve. As such, their ability to take risks will be curbed, lowering profitability, Sullivan said.
CTPartners is shifting headhunters from banking to industries such as pharmaceuticals and clean energy as demand for finance professionals dries up, he said. The company is the world’s sixth-largest executive search firm, Sullivan said.
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