European banks cut 80,000 jobs in 2013

LONDON: Europe’s biggest banks further cut staff by 3.5% last year and the prospect of a return to pre-crisis employment levels seems remote, despite the region’s nascent economic recovery.
Spurred into action by falling revenues, mounting losses and the need to convince regulators they are no longer ‘too big to fail’, banks around the world have shrunk dramatically since the collapse in 2008 of the American bank Lehman Brothers triggered the financial crisis. Last year, the tide of bad news began to turn for European banks, which are among the region’s biggest employers.
Helped by recovering economies and diminishing fears for the future of the eurozone, the benchmark Stoxx Europe 600 Banks Index rose 19%, outpacing the 17.4% rise in multi-sector stocks. But despite the improved outlook, Europe’s 30 largest banks by market value cut their workforces by 80,000 in 2013.
Recruitment consultants are warning workers’ hopes of a turnaround this year could be misplaced, bad news for countries like Spain where tens of thousands of bank layoffs have helped push unemployment to 26%. However, although painful for people who have lost their jobs, the downsizing of big banks through a combination of asset sales and layoffs means that banks will not have as big an impact on overall employment when future crises.
Antoine Morgaut, managing director for Europe and South America at recruiter Robert Walters, does not expect employment in the industry to ever return to its peak in 2008. Then the 25 of the top 30 banks with comparable numbers employed about 252,000 more people than the 1.7 million they do today. “It’s been a bubble for 20 years,” Morgaut said.
“In specialist areas we are seeing a bit of an upside, but it’s quite marginal and will stay that way for the next six to nine months,” he added.
Last year’s most dramatic job cuts came from major restructuring, such as Spain’s Bankia which laid off 23% of its workforce to help meet the conditions of its 41 billion euro European bailout.
Italy’s Unicredit, which cut the largest number of employees, 8,490, said in its annual report that some of the cuts were the result of a plan to outsource IT functions to joint ventures.
Belgian group KBC cited asset sales as one of the main reasons for its reduction of 7,938 staff, or 22% of its workforce. The bailed-out bank sold the Russian subsidiary Absolut Bank and the Serbian company KBC Banka. Staff figures for Absolut Bank were not available, while the most recent figures for KBC Banka show 501 employees at the end of 2012.
Spain’s BBVA also cited asset sales as the driver of its reduction of 6,547 employees, or 23% of the workforce, which came in the year the bank sold operations in Latin America.
At Bank of Ireland, where a 6.3% drop in the workforce was the fifth largest in the region, a layoff program was the main reason.
Routine streamlining continued last year. HSBC, the biggest employer in the peloton, cut its workforce by 6,525, or 2.5% of its global total. The bank weathered the crisis without a bailout, but has weakened over the past three years by closing or selling dozens of businesses.
Only three of the banks – Barclays, Handelsbanken and Deutsche Bank – added jobs last year, and those totaled less than 770. Reuters