Bank layoff slideshow updated with latest news of layoffs at Morgan Stanley.
NEW YORK (
) -- Banks across the world slashed jobs in 2011 as they coped with a difficult macroeconomic environment that has been sparked by the European debt crisis, tighter regulations and pressure to improve shareholder returns.
The cuts, totaling 120,000 announced so far according to
, are not yet as bloody as those seen in 2008 and 2009, but analysts expect further headcount reductions to be inevitable as banks in Europe begin their deleveraging process.
While European banks have been leading the job cuts, banks in the U.S. are also increasing their focus on expenses, with revenue growth still remaining elusive.
For investment banks, which dominate the list, compensation is the biggest cost driver, often accounting for 50% of operating expenses. A small change in the compensation-to-revenue ratio can go a long way in improving return on equity -- a key metric of profitability for shareholders.
As for commercial banks, they have been able to trump analyst expectations through massive improvements in credit quality so far. But with that metric no longer a surprise, analysts are starting to focus on steadily rising expenses and their impact on the bottom line.
Also worth noting is that while they cut jobs in some divisions, global banks continue to invest in growth areas, so the overall reduction in headcount might be less than reported.
Read on to find out which banks have been sharpening the ax in recent months.
said Dec.15 that it will cut
1,600 jobs by the end of the first quarter of 2012 as part investment bank's year-end performance review process.
The cuts will not impact year end performance-based bonuses, even for potential job-losers or financial advisors within Morgan Stanley Smith Barney, a spokesman said.
"As we conduct our year-end performance management process and evaluate the right size of the franchise for 2012, we anticipate the elimination of approximately 1,600 positions across the firm globally impacting all job levels," Morgan Stanley spokesperson Mark Lake said in an emailed statement.
Earlier this year the bank said it would shed about 300 underperforming financial advisers from its brokerage unit, Morgan Stanley Smith Barney, as it attempts to tighten its control on expenses.
The investment bank is targeting an annual expense savings rate of $1.4 billion in the next three years.
Morgan Stanley has a different compensation structure from its peers due to its significant global wealth management business. Its compensation- to- revenue ratio rose to 51% in the third quarter from 45% in the second quarter.
CFO Ruth Porat said during the third quarter earnings conference call that expenses played "catch-up" in the third quarter, with the year to date ratio coming in at a lower 46%.
Still she added that the investment bank would seek a balance between "protecting our important franchises and paying those employees who are delivering differential value" and the "need to deliver acceptable returns to shareholders."
said on Dec.14 that it will layoff 2,350 jobs as it is set to make a 2011 loss and write off 2.5 billion euros or $3.2 billion worth of assets.
The job losses include 1,750 jobs includes 1,750 in Credit Agricole's corporate and investment bank, which has a workforce of 13,000. Most of the job cuts will take place internationally. About 550 investment banking and 300 consumer finance jobs will be lost in France.
The bank said it will exit 21 of the 55 countries which it operates in and will shut down equity derivatives and commodities businesses.
Credit Agricole's move follows that of its peers
which have also announced headcount reductions.
is planning to layoff 4,500 jobs, or 1.6% of its total workforce over the next few quarters.
Speaking at the Goldman Sachs Financial Services Conference on Tuesday, CEO Vikram Pandit said the bank will take a $400 million charge related to the job reduction, including severance charges.
Citi is targeting an annual reduction of 3% to 5% of its expenses. A sizeable chunk of the latest job cuts are likely to be in the investment banking division, given the pressure on markets revenues as a result of ongoing uncertainty in Europe.
Citi has begun trimming its workforce in its investment banking office in London, Reuters reported on Wednesday. Those in the mergers and acquisitions division were notified on Monday, while equities and foreign exchange are expected to be notified on Wednesday and Thursday, the report said, citing people familiar with the matter.
Citigroup shed thousands of jobs in 2008 and 2009 following the financial crisis. Since then its workforce has leveled off and stood at about 267,000 as of the third quarter of 2011.
is expected to lay off 200 employees from its U.S. investment banking and corporate banking unit, according to a
The cuts may amount to 10% to 20% of its 2,000 workers in its U.S. unit.
The bank plans to cut as many as 2,000 jobs next year in its Russian retail banking unit, as part of its plans to trim corporate and investment banking costs by 5,000.
The firm is shedding assets as it deals with the impact of the European crisis. It is trimming businesses such as aircraft financing, leveraged finance and commercial real-estate financing in the U.S.
Naseem Haffar, who was hired as U.S. head of loan sales and trading in March 2010, and New York-based senior credit traders Joseph Finnern and Zachary Chavis were among those dismissed, the report said, citing people familiar with the situation.
is set to cut nearly 1,400 jobs from its corporate and investment bank, union representatives said on Wednesday.
The cuts will include 373 jobs in France and more than 1,000 jobs abroad. Most of the layoffs are expected in the structured finance and capital markets teams.
The announcement came a day after rival
said it was in talks with unions over layoffs. One union member said the number of job cuts to be about 500 to 600, according to a
According to another Reuters report, the CEO of SocGen has said a recession cannot be ruled out in France in 2012 and that layoffs cannot be avoided.
said on Monday, Nov. 14 that its workforce will reduce by 6,150 jobs between now and 2015 as it scales back its investment banking operation, shrinks its eastern Europe operations and raises capital.
The bank sees job cuts of around 7,290 in Western Europe while it expects to add some 1,135 jobs at its businesses in Central and Eastern Europe, according to a
report. The bank will fire 5,200 employees in Italy.
Local press reports quote the CEO as saying the bank is not a takeover target, given that it is already a SIFI- a bank that is too big to fail- and that there is no desire to create bigger entities.
The trustee in charge of liquidating
said termination notices have been issued to the 1,066 employees of the broker-dealer unit.
The firings were "a necessary part of the court-ordered liquidation of MF Global Inc.," the trustee said. The employees have been terminated with immediate effect, though they will be paid through Tuesday, Nov. 15.
The firm had already laid off 165 employees across functions from another unit that once had 250 people,
The Wall Street Journal's
fins.com reported, citing a person familiar with the situation.
Many terminated employees haven't received severance pay, deferred compensation or bonuses, according to that report.
MF Global is being liquidated after its parent filed for bankruptcy on Oct. 31. Regulators have launched a formal investigation into the firm after more than $600 million of customer funds went missing.
Swiss investment bank
said on Nov.1 that it will cut another 3% of its workforce or an additional 1,500 jobs after a disappointing third quarter and expectations that difficult market conditions will persist.
The latest cuts come on top of earlier plans to slash 2,000 jobs announced in July following a tough second quarter.
The firm raised its cost-saving target to 2 billion Swiss Francs ($2.3 billion) from 1 billion Swiss Francs previously announced. Credit Suisse now expects headcount reductions in its investment banking operations and other efficiency measures to generate 1.2 billion Swiss Francs in savings by 2012 and the remaining 0.8 billion will be generated by the end of 2013.
"We believe subdued economic growth and the low interest rate environment and increased regulation that we are seeing may persist for an extended period. We may well continue to see continued low levels of client activity and a volatile trading environment," Credit Suisse CEO Brady Dougan said in a statement following the results.
has tripled its cost-savings target to $1.2 billion from $400 million announced in July after it posted a loss in the second quarter ended September.
The brokerage said the bulk of the savings will come from its wholesale business, which suffered a loss of 88 billion yen in the first half of fiscal 2008.
Nomura, which had previously announced 400 job cuts, did not detail how many more jobs will fall under the ax. The CFO Junko Nakagawa said 70% of the savings will be generated through reductions in personnel expenses and that 60% of the cuts will be made in Europe, according to the
Wall Street Journal.
"By refocusing its business and driving cost efficiencies, Nomura aims to return to profit bylowering its break even point," the company said.
said on October 4 that it will cut 500 jobs in response to a "significant and unabated slowdown in client activity" amid greater macro uncertainty.
The bank will layoff employees in its Corporate Banking and Securities division in the fourth quarter and the first quarter of next year, mostly outside Germany.
Ongoing market conditions remain turbulent and the group is also likely to take a EUR 250 million impairment charge on Greek sovereign debt.
As a result, the bank said that it expects to miss its planned 2011 pre-tax profit target of EUR 10 billion from its core businesses. However, it said it will remain profitable in the third quarter and expects "robust" earnings for the full year.
Bank of America
Bank of America
said on September 12 that it will cut 30,000 jobs over the next few years as part of its efforts to eliminate $5 billion in expenses from its consumer and small banking businesses.
CEO Brian Moynihan unveiled a cost-cutting plan on Monday at the Barclays Capital Financial Services Conference.
The first phase of that plan would reduce $5 billion out of $27 billion in expenses for its consumer and banking business by the end of 2013. In the second phase, which is under review, the bank would seek to reduce a portion of the $28 billion in expenses incurred in businessse including commercial banking and global corporate banking. The cuts in the second phase will likely be smaller.
Moynihan did not mention the job cuts in his presentation. However, the bank released a statement soon after the presentation.
The bank said that it expects attrition and the elimination of appropriate unfilled roles will be a significant part of the anticipated decrease in jobs.
said on Aug. 23 that it will slash 3,500 jobs as it targets 2 billion Swiss Francs or about $2.5 billion in annual cost cuts by the end of 2013.
Of the expected reductions, approximately 45% will come from the Investment Bank, 35% from Wealth Management & Swiss Bank, 10% from Global Asset Management, and 10% from Wealth Management Americas, the company said.
The bank had already hinted at job cuts when it announced results last month.
"Banks' returns have declined overall in the last 12 months, reflecting deleveraging and the actions being taken in advance of increased capital requirements," Group CEO Oswald J. Grübel had said. "We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency."
The bank said on Tuesday that it will incur restructuring charges of 550 million Swiss francs in its cost cutting initiative, the bulk of which will be recognized in the second half of 2011.
The management issued a weak outlook for its trading business for the third quarter last month. "Current economic uncertainty shows little sign of abating. We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday."
Bank of New York Mellon
Bank of New York Mellon
said on August 10 that it will cut 1,500 jobs globally or roughly 3% of its workforce of 48,900.
The custody bank said it will impose a hiring freeze and trim the use of temporary workers in an attempt to limit to lessen the impact on its current staff.
Like several other banks that reported in the second quarter, Bank of New York Mellon had a tough time reining in expenses.
Earnings from continuing operations were up 7% year over year , with total fee revenue increasing 15% to $3.85 billion. However, total noninterest expenses grew 21% compared to the same period last year to $2.69 billion, on the back of annual employee merit increases and higher volume-related and business development expenses.
Royal Bank of Scotland
Royal Bank of Scotland
plans to cut 2,000 jobs in its investment banking division,
reported citing John Hourican, head of the bank's global banking and markets division.
RBS has scaled back its investment banking division, reducing its client base from 26,000 before the financial crisis to 5,000 now and has exited 12 countries, according to the report.
Hourican told FT that a smaller more focused business would deliver more stable profits.
A RBS spokesperson told the
that the bank will make more cuts including at the investment banking unit, but that the bulk of the cuts had already been made.
Europe's largest bank
said on Aug. 1 that it may cut as many as 30,000 jobs or 10% of its workforce worldwide as part of an initiative to generate substantial cost savings of $2.5 billion to $3 billion by 2013.
The bank said it had already begun "operational restructings" in Latin America, the U.S., the U.K., France and the Middle East that will reduce headcount by around 5,000.
However, it will continues to add jobs in high-growth markets such as Asia, so the overall reduction in headcount might be lower, the bank said.
Job cuts were expected as HSBC said in May that it is looking to exit 39 retail banking markets, as it re-evaluates its international strategy. "We can't be all things to all people in all countries," CEO Stuart Gulliver told analysts.
In the U.S., the bank is winding down its consumer loan business, closing down non-strategic branches, and has placed its $33 billion credit card portfolio under "strategic review".
It recently sold 195 of its branches to
for $1 billion.
expects to eliminate a total of 3,000 jobs in 2011 as it faces a difficult operating environment.
So far, Barclays has already cut 1,400 jobs including 700 posts at its investment banking unit, Barclays Capital, and 500 at its U.K. consumer unit. The bank employs about 145,000 people globally including more than 55,000 in the U.K.
CEO Bob Diamond said the bank has identified 2 billion pounds in savings opportunities by 2013, and expects to deliver a cost reduction of 250 million pounds this year, net of restructuring.
The British bank said profit for the first half of 2011 fell 38% from a year earlier as the bank recorded a charge of 1 billion pounds to compensate customers who were sold faulty payment protection insurance and as it suffered losses on acquisitions and disposals.
said it will cut 15,000 jobs as it reduces its presence in 15 countries and improves focus on the U.K.
Most of the job losses will come in the U.K. as a result of cuts to management functions and by centralizing some roles, the bank said in a statement.
The bank has a total of 104,000 employees, with about 4,000 outside the U.K..
By 2014, it hopes to generate savings of about 1.5 billion pounds in annual costs. "We have to do this. This bank has lost money, it's losing money this year on an after-tax basis." CEO Antonio Horta-Osorio said.
"We have to get this bank back on to its feet to support the UK economy and we have to pay taxpayers' money back," he said.
Goldman Sachs said during its second-quarter earnings conference call that it might lay off as many as 1,000 employees globally.
The investment bank offered little details on the nature of the layoffs, saying they would be broad-based but that it was unlikely to be significant in growth markets, where it continues to invest.
In an earlier filing, the investment bank said that it may cut 230 employees in the New York region.
Goldman is targeting $1.2 billion in compensation and non-compensation expenses this year, the effects of which are likely to be fully realized only next year, CFO David Viniar said in the second quarter earnings conference call.
Management is focused on the dollar savings rather than the "number of heads," meaning that layoffs could be both at the senior and the junior level, Viniar added.
Compensation expenses declined 16% year on year in the second quarter to $3.20 billion or 44% of total revenues.
said in July that it would eliminate as many as 530 jobs from its technology unit and shift an additional 320 non-client facing IT employees to
The company expects to record approximately $110 million to $130 million in pre-tax restructuring charges in the second half of 2011 to account for the severance and related costs associated with the job cuts and other transition costs.
"Our business operations and IT transformation program reflects our commitment to maintaining an advantage that supports our continued growth in an increasingly competitive global environment," said James Phalen, executive vice president and head of Global Operations, Technology and Product Development. "While making changes that impact a number of our employees is never easy, we believe that this move is a necessary step that will allow us to better deploy our resources in line with our core competencies, efficiently leverage the capabilities of our partners, and enable us to offer more sophisticated products and services to our clients."
State Street saw a 20% rise in expenses during the second quarter on the back of a jump in higher salaries and employees benefits.
The custody bank is trying to actively control expenses, with an annual pre-tax expense savings target of between $575 million and $625 million by the end of 2014.
Last year, the company slashed 1,400 jobs.
laid off 1,900 employees in March, less than 1% of its workforce, as demand from mortgage refinancing slowed.
A majority of the jobs were temporary, created to assist in meeting the surge in mortgage applications after interest rates hit a new low in 2010. Wells employs about 50,000 in its mortgage division.
The bank is now aggressively trying to cut costs as it struggles to generate revenue growth from lending and interest rates remain low.
It recently unveiled a major cost-cutting program called "Project Compass," which it hopes will drive non-interest expenses down by $1.5 billion by the fourth quarter of 2012 or potentially adding 18 cents a share to the bottom line.
The project focuses on removing complexity and duplication in staff/technology functions, reducing loan resolution, loss mitigation and foreclosed asset expenses and business optimization.
Wells did not specify any details on staff cuts but did say that it would be hiring more team members in bank branches in the East.
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--Written by Shanthi Bharatwaj in New York
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