The wave of lay-offs in the banking sector that commenced in 2007 seems to be ongoing. While the year witnessed new job cuts of close to 100,000 by big banks in Europe and the US, the trend is expected to continue into 2016.
Both BNP Paribas and Barclays could cut thousands of jobs early next year as part of this wave, according to an analysis by the Financial Times. The job cuts at the two banks have been attributed to their attempt to cut costs by 10-20%, the report said.
The axe for Barclays, which employs approximately 20,000 people, could fall on 1 March, when its chief executive Jes Staley would announce a new strategy along with the bank's annual results. Staley could also announce plans to shrink its investment banking sector at a quicker pace. However, the London-headquartered bank declined to comment.
Yann Gérardin, BNP Paribas's new corporate and institutional banking chief, could announce a new cost-cutting plan in February 2016. This is apart from its existing plans to cut more than 1,000 jobs across its Belgian retail network.
Moreover, some analysts believe that 2016 could see similar announcements from more banks apart from BNP and Barclays. Factors such as ultra-low interest rates, sluggish activity among clients and post-crisis regulations – which require banks to hold more equity – could lead to the lay-offs.
Jon Peace, a London-based banks analyst at Nomura said, "I don't think we can rule out the end of job cuts until RoEs recover to acceptable levels." He added that in the longer term job cuts could increase due to digital transformations "with retail banks cutting branches in favour of online services and investment banks cutting back offices in favour of online technologies such as blockchain".
Mike Mayo, a New York-based banking analyst at CLSA said that even though European banks announced more job cuts this year in comparison to their American peers, US employees were still at risk in 2016.
"The additional electronification of the security markets should result in an ongoing swap of capital for labour... more machines over people. [This is] the worst decade of revenue growth since the great depression," Mayo added.
Job cuts in 2015
The job cuts in 2015 of about 100,000 employees, excludes the impact of major asset sales. It represents 10% of the total workforce across 11 large European and US banks, according to the FT analysis.
Dutch lender Rabobank was one of the most recent to announce job cuts. It let go of 9,000 employees, a day after Morgan Stanley reported 1,200 job cuts, including at its ailing fixed income division.
In September, Deutsche Bank was to axe 23,000 jobs under new co-CEO John Cryanas's reorganisation efforts. In October 2015, Standard Chartered was planning to do away with a quarter of its senior staff resulting in about 1,000 job cuts worldwide, apart from shutting its equity derivatives and convertible bonds businesses.
According to US census data, US banks and insurers cut almost 400,000 jobs during the first five years of the financial crisis. In Europe, its 30 largest banks by market value cut more than 80,000 jobs between 2008 and 2014, as per data published by the banks.