European banking job numbers continue to decline

The banking sector’s long and painful restructuring accounted for a further 1.2 per cent fall in staff numbers at Europe’s biggest lenders in the first half of the year, data compiled by Reuters shows, with little prospect of an upturn any time soon.

Forced to hold more capital against risky assets since the imposition of new regulations after the financial crisis, Europe’s top lenders have been shrinking steadily to counter the resulting loss of profitability in some areas of their business while a crackdown on proprietary trading has cut off a valuable source of supplementary revenue.

Of the 25 of Europe's 30 largest listed banks that disclose employee numbers for the six months to the end of June, including Barclays, Deutsche Bank and UBS, headcount fell at 16. Though nine of the banks added staff, total jobs across the group fell by 21,135.

About half of the drop is attributable to Dutch lender ING no longer including Indian offshoot ING Vysya Bank in its headcount figures, but it remains clear that banks are becoming less significant employers.

The trend is even more pronounced in the United States, where the four biggest banks by assets - JPMorgan, Bank of America, Citi and Wells Fargo - cut 23,300 jobs in the first half of the year. That takes the total for the past 12 months to more than 52,000 - about 5 percent of their combined workforce.

The pace of decline in Europe was slightly slower than in 2013 when the 25 banks together cut about 63,000 jobs over the full year, but financial services recruiters say that more swingeing cuts cannot be ruled out.

Calculations by Reuters show that while European banks improved their balance sheets by €530 million in the first half, profitability remained well below targets.

Royal Bank of Scotland, which was bailed out by the British government in 2008, made some of the deepest cuts. Its workforce shrank by 5,000 as it reduced the number of contractors it employs, streamlined operations and sold the Chicago-based division of its US bank Citizens.

Recruiters said that most job cuts have come in investment banking, which has been hit hard by the tougher capital rules and low interest rates.

British lender Barclays has axed 2,700 jobs at its investment bank this year as part of a wider cull of 19,000 roles over three years.

Back-office roles also remain at risk, while greater use of mobile banking poses a threat to branch staff. Deutsche Bank analysts have forecast that Britain will need only 500 bank branches in 10 years’ time. Britain’s six largest banks currently have nearly 8,000 branches.

Even if the economic outlook picks up, banks are unlikely to go on any hiring sprees as they adust to the new shape of their organisations and keep a wary eye on market volatility caused by wider geopolitical concerns, such as the situation in Ukraine.

Reuters