October 12th, 2011
Econintersect: First the banks and now Wall Street firms are making plans to make significant cuts in employment. The announcements of job cuts are concentrated in the finance part of FIRE (finance, insurance and real estate). The latest news was reported October 11 by the Wall Street Journal and the number of job cuts was estimated at 10,000 by the end of next year. This means that more jobs will be cut than have been added since the end of 2009 and Wall Street securities business employment will be down 17% from the level before the financial crisis started in 2008. Follow up:
Follow up:As GEI News reported on September 21, the major banks are bleeding cash through mortgage mess wounds. To date $66 billion in losses have already been recognized and the estimates are that the total could double. That has put major stress on banks’ earnings and cash flows. On September 12 ABC News had confirmed that Bank of America plans to lay-off 30,000 employees in the next few years. By the end of this year 6,000 of those jobs will be terminated.
Banks are trimming staff in Europe, as well. In August Reuters reported a number of planned employment reductions: Barclays (3,000 by the end of 2011), HSBC (5,000m already cut with 25,000 more by the end of 2013), Credit Suisse (2,000 this year), UBS (1,700 this year), Rabobank ( more than 1,200 over the next two years), Lloyds Bank (15,000 cuts by 2014, adding to 27,000 layoffs already made since 2008), Banco Populaire (1,120 cuts) and Intesa SanPaolo (3,000 cuts this year and next). Reuters did not indicate if any of these cuts would be in the U.S.
The above numbers are subject to revision. Just one week after the Reuters article, The New York Times reported that the UBS job cuts were doubled to 3,500. There is also a lot of unspecified information about cuts. From the NY Times:
A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.
Note how fast things are moving. The above excerpt from the August 28 NYT had B of A cutting 10,000. Less than two weeks later the number was 30,000.