Is the banking sector headed for more layoffs?

By Maureen Aylward

HSBC announced that it is cutting 30,000 workers, representing 10 percent if its workforce. We asked our Zintro experts if cutting jobs is a trend for banks.

Bryan McGee, an expert in banking and finance, believes the banking sector will continue to see layoffs and that these layoffs will be the result of two key factors. “The change in interchange income is decimating the financial performance of many small, middle, and large banks. Until banks are able to replace this non-interest income, they will be forced to reduce staff to keep efficiency ratios at acceptable levels,” says McGee. “Secondly, banking is in a retraction mode, and this will cause mergers and staff reductions as banks attempt to make their balance sheets and ratios more attractive to potential suitors.”

Mortgage Pro, a banking executive and former board member of two banks, says that HSBC was (and still is) having trouble in many countries. “Like Citi, HSBC is bloated with people. It has taken since the crash in 2008/09 until now for the bank to realize that the economy is not picking up and that holding on to employees and hoping everything turns around is not good practice,” he says. “HSBC, Citi, and other big banks have and will continue to let people go. All types of companies are slow to realize that personnel expense (including benefits) is roughly 60 to 70 percent of a company’s expenses.”

Osmond Plummer, an international trainer in wealth management, says that banks will continue to make reductions in staff (Credit Suisse has also announced some) in many areas as capital requirements reduce lending volumes and as wealth management revenues are hit by stock market stagnations and political management of the world economy. “In politically charged environments, the West is going to see little to negative growth, which will indicate further layoffs and a downwards spiral,” says Plummer. “Until politicians make some hard choices, which may lose them votes and potentially political office, the West will carry on a Japan-like hovering between anemic growth and recession.”

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