Major banks using job cuts as way to reduce expenses
July 28, 2011‐ London, UK
Last week, the world over, there is one news buzzing in the banking industry - Bank Job Cuts. While the situation is bad globally, it is worse in the UK with almost all major banks serious considering trimming its staff sizes.
HSBC plc is planning to cut 10,000 jobs. It has already cut 700 jobs in the UK retail banking segment during June 2011. HSBC has about 55,000 employees working in the UK. Cutting jobs would reduce redundancies and a cost of up to 3.5 billion pounds. Much of these could be at the retail banking level considering the fact that the bank is no longer considering retail to be its core for its future.
HSBC is aiming at cut costs by $3.5 billion by 2013 and use the savings to pump in fast growing markets such as Asia. The bank would hire about 2000 banking professions to cater to the China and Singapore markets clearly pointing at Asia to be the place where the bank could make big money in future.
Earlier last week UBS announced plans to cut 5000 jobs. Asia and Australian units of the bank however could escape from the job cuts.
The story is similar with Credit Suisse which is planning to cut jobs as a measure to cover up the slowdown in its profits. The bank feels that the performance of its investment banking is below its own expectations. Goldman Sachs, Lloys and Royal Bank of Scotland are considering reducing its staff strength in the investing banking space. State Street Corp also is planning to cut 850 jobs.
Lloys is cutting 625 jobs now and is planning to cut 2225 more when Lloyds bank and HBOS merger gets completed. Banking analysts belive the number could go upward having seen the merger of Royal Bank of Scotland and NatWest.
All these would really be essential steps failing which most European banks needs heaving funding so as to be ready for Basel III. An estimate say that banks needs 460 billion euros ($650 billion) by 2019 in order to reach Basel III capital adequacy norms. Apart from job cuts, UK banks were also considering shutting down some branches. Earlier, during the beginning of the month, reports are out that HSBC is closing 36 branches while RBS is shutting 55 branches.
Meanwhile, Barclays Bank, during the middle of the month, said that it is re-aligning its business in India and hence the client relationship teams at Barclays Corporate and Barclays Capital in India will be combined, a move that would result in around 25-30 job cuts.
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