Three of the world’s biggest banks are preparing to shed a combined 5,350 investment bankers, as the industry struggles to adapt itself to continuing economic woes and the advent of new regulation.
Morgan Stanley is cutting a further 4,000 jobs, Deutsche Bank is set to lay off about 1,000 of its investment banking staff, equivalent to about 10 per cent of the unit’s workforce, while Citigroup is shedding 350 bankers.
Deutsche’s cuts, likely to be announced with quarterly earnings in a fortnight’s time, bring the German group more into line with European peers such as Credit Suisse, UBS and Barclays, which have taken a more aggressive stance on cost cuts over the past year.
Deutsche announced it was cutting 500 jobs last autumn, a process that the bank said a few months ago was largely complete.
The new job losses are likely to be mainly outside Germany, with most at the group’s principal investment banking bases in London and New York.
At Citi, the additional job losses, which will be focused mainly on traders, compared with a 17,000-strong securities and banking division. The US bank cut 900 jobs in December.
Credit Suisse and UBS are both pressing ahead with implementing job cuts announced late last year.
Analysts believe investment banks will remain under severe pressure to cut more costs over the coming months, as the cyclical effects of difficult trading conditions and a bleak economic outlook add to the longer-term challenges that come from tougher regulation of the industry.
“The eurozone crisis and the global macroeconomic environment have made for a cyclically weaker revenue environment,” said Kinner Lahkani, Citi analyst, pointing to a possible 10 per cent fall in the overall revenue pool across the industry in the area of fixed income, currencies and commodities.
“But the whole industry also faces structural change. The impact of over-the-counter derivatives reform, Volcker and Basel III could lead to a 15-20 per cent headwind on revenues over the next two to three years.”
So far this year, according to analysts, Morgan Stanley has implemented 1,600 lay-offs, while UBS, Credit Suisse and Barclays have all cut 1,500 staff or more.
However, on Thursday, as it unveiled weaker than expected investment banking results, Morgan Stanley said it would cut a further 7 per cent of its workforce, or more than 4,000 jobs, by the end of the year.
Goldman Sachs said it expected the sale of a hedge fund administration unit would reduce its headcount by “a couple of hundred” people and it would separately look to save about $500m a year in costs.
One Deutsche insider said its cuts were “tactical, not strategic”, suggesting there may be more to come in September when the bank’s new co-chief executives Anshu Jain and Jürgen Fitschen unveil a strategic review.
Extract taken from:http://www.ft.com/cms/s/0/6c5382ea-d1c3-11e1-bb82-00144feabdc0.html#axzz21421Zbym
