RBS, HSBC, Lloyds and Barclays have announced that they will employ just over 600k people worldwide by the end of 2013, however, this is a sign of the times since this is 24% less than their peak in 2008 – just 5 years ago.
Due to the European debt crisis, investors are increasing the pressure on banks to reduce fixed costs as they continue to post lower revenue rates each year. Recently the banks went through a phase of making bigger, more significant redundancies, but these new figures show that this phase has not quite finished yet.
The drive behind such redundancies is, according to Ismail Erturk, is due to economic decline, investment banking not achieving the same results as it once did and the banks’ attempt to reduce wages to increase profit margins. However, Ismail and other economic insiders are not sure this is the best route to take and that re-training their workforce and re-iterating their goals would help increase productivity and improve the relationships between bankers and the public.
These cuts are not minor; HSBC has promised to reduce costs by up to $3 billion by 2016. There is no way that this can be achieved without cutting people, especially since by jobs they are not just cutting general wages but also bonuses and expenses.
In difficult financial times, as much as the media may highlight the big bonus payouts, there are still redundancies being made in the banking sector. Just like any other industry, when they need to tighten the purse strings, one of the first actions to take is to make redundancies.
Yet even once the financial climate settles, the outlook for several banking jobs is uncertain. Again like many other industries, technology is playing its part in removing the need for human employees. Antony Jenkins, CEO of Barclays has already stated that he predicts his workforce will reduce by a further third due to the developments in online banking.
As much as the term money makes the world go round is true, the money industry is not as straightforward as that phrase. It suffers the same threats as any other industry does. But due to media frenzies, bonuses and big payouts are far more out in the open, making it appear that they have more money to burn. That is not the case and there are still many who will be in the firing line when it comes to redundancies, now, and in the future.
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- I have been writing articles about finance, the stock market and wealth management since 2008. I have worked as an analyst, fund manager and as a junior trader in 7 different institutions.
