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Big Banks Cutting Tens Of Thousands Of Jobs; Huge Implications

Money center banks — which over the past few decades have grown into the biggest financial entities the world has ever seen — appear to have hit a wall, and are now shedding tens of thousands of workers. Three recent examples:

Barclays plans to cut more than 30,000 jobs

(CNBC) – Barclays plans to cut more than 30,000 jobs within two years after firing Chief Executive Antony Jenkins this month, The Times reported on Sunday.

This redundancy program, which could reduce the bank’s global workforce below 100,000 by 2017 end, is considered as the only way to address the bank’s chronic underperformance and double its share price, the newspaper said, citing senior sources.

These job cuts are likely to affect staff at middle and back office operations, where largest savings are achieved, the Times said.

The paper said that a potential candidate, who would replace Jenkins, is expected to ax jobs much faster and more deeply than the ousted boss.

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Deutsche Bank to cut workforce by a quarter

(Reuters) – Deutsche Bank aims to cut roughly 23,000 jobs, or about one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank division, financial sources said on Monday.

That would bring the group’s workforce down to around 75,000 full-time positions under a reorganization being finalised by new Chief Executive John Cryan, who took control of Germany’s biggest bank in July with the promise to cut costs.

Deutsche’s share price has suffered badly under stalled reforms and rising costs on top of fines and settlements that have pushed the bank down to the bottom of the valuation rankings of global investment banks. It has a price-book ratio of around 0.5, according to ThomsonReuters data.

Deutsche is mainly reviewing cuts to the parts of its technology and back office operations that process transactions and work orders for staff who deal with clients.

A significant number of the roughly 20,000 positions in that area will be reviewed for possible cuts, a financial source said. Back-office jobs in the group’s large investment banking division will be concentrated in London, New York and Frankfurt, the source said.

PostBank has about 15,000 positions, pointing to roughly 8,000 layoffs at Deutsche once the unit’s spinoff is completed as planned in 2016.

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UniCredit plans to cut around 10,000 jobs

(Reuters) – UniCredit (CRDI.MI), Italy’s biggest bank by assets, is planning to cut around 10,000 jobs, or 7 percent of its workforce, as it seeks to slash costs and boost profits, a source at the bank told Reuters on Monday.

The planned cuts will be concentrated in Italy, Germany and Austria, several sources said, adding that they include 2,700 layoffs in Italy that have already been announced.

A UniCredit spokesman declined comment beyond noting that the bank’s CEO Federico Ghizzoni had on Sept. 3 said there were no concrete numbers on potential lay-offs, after a report said it was considering eliminating 10,000 positions in coming years.

UniCredit, which has 146,600 employees across 17 countries, is under pressure to boost its profits as low interest rates are expected to keep hurting its earnings in coming years.

Such a sudden, widespread retrenchment can mean several things:

1) Technology is making a lot of back office staff redundant. That’s reasonable and to be expected. Automation of knowledge work will be one of the big stories of the coming decade and finance is a prime target. A quick look at the growth of crowdfunding (from zero in 2009 to an estimated $50 billion in peer-to-peer loans in 2016) tells you all you need to know about the future of conventional bank lending.

2) The profitability of core banking operations is going to crater in the coming year and these guys are trying to get out in front of it — while hoping to hide the deterioration within massive workforce reduction write-offs.

3) The availability of good jobs for European college graduates — already too low — is going to shrink further. It’s virtually impossible for a finance-dependent system to grow while major banks are shrinking, so Europe will remain stuck in neutral while its governments pile up ever-greater debts and more peripheral countries join Greece on the public dole. And the euro will, at some point, be devalued suddenly and drastically.

4) The other big banks can’t be in much better shape, since they’re all operating in the same zero-interest rate, low-growth world. In the US, where auto loans have been a singular bright spot, what happens when cars stop selling? We may be about to find out. See U.S. factory output declines on sharp drop in auto production.

5) The global recovery is a mirage. Six years in, with stock and bond prices near record levels, demand for support staff in deal-driven entities like banks should be rising. Layoffs on this scale are bottom-of-a-recession events.

Add it all up, and significant Fed tightening looks like a hard sell. The opposite is much more likely.

19 thoughts on "Big Banks Cutting Tens Of Thousands Of Jobs; Huge Implications"

  1. We live in a Capitalistic World where the capitalists do not pay the costs involved in their “efficiencies”. So it’s actually Communism where the elite get the goodies and the serfs (you and me) pay the costs. 30,000 people’s living costs will be paid by you and me if they cannot find new jobs.
    This system will eventually collapse because trying to sell things to “jobless consumers” is extremely difficult.

  2. THE Mark of their beast is coming. Will all be controlled by you now. No need the middle man. Buy and sell when, where, and what you want.

    Comes with severe consequences though. Might cost you your soul in the end.

  3. The Founding Fathers were not stupid people and understood history and what destroyed passed economy’s and to stay away from doing the same things the past collapsed country’s did to their economy’s. But we didn’t listen .. I think Thomas Jefferson gave us the best warning but we didn’t listen ….., “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.”

  4. Twenty years of blowing bubble by the Federal Reserve has created a bubble in the finance industry; the USA’s finance industry has traditionally been 10% of the S&P 500, but now it’s 15%. These people are subtracting value from most of the economies in which they work, it’s time to put them back to work in more effective job positions.

    1. Yep. The (NON) Federal Reserve should be the one shedding jobs (Lord knows those parasites have been feeding off of us for 100 years). I’d like to see Yellin pulling weeds out of a bean field, but I’m sure her “tribe” will fix her up.

  5. I read a while back at the Automatic Earth blog site, when people first started wondering if the Fed would raise rates given the overall economic weakness, that banks were having trouble making a profit with ZIRP in place. Ilargi simply said, “That’s all you need to know.”

  6. I think one fact that John failed to point out here is that all those bank jobs being eliminated are really boring ones. Notice that no tellers are being let go, nor branch officers or loan specialists. That means another possibly huge implication is that those white collar sleepwalkers may suddenly wake up and decide to buy a car with a 7-year loan, thus rescuing both the automobile and banking industries for another quarter.

  7. I remember reading where the economy goes from agriculture/manufacturing base to financialization and back, and how we were overdue for a major drawndown in financial jobs after 2008. Looks like the propped up bubbles are deflating. Also I love how temporary easily becomes permanent, like closing the gold window, the fed’s bloated balance sheet and now ZIRP (or at least near permanent for ZIRP).

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