Post date: Aug 26, 2011 3:14:6 PM
A number of major banks have announced they will shed thousands of jobs as they trim operations for leaner times, heightening insecurity for many in the industry.
UK-BANKING JOBS - ABN Amro is the latest major European bank to announce job cuts, joining Barclays, Goldman Sachs, HSBC and UBS among others - as the dual impact of the euro zone debt crisis and tougher regulations - starts to bite.
Thousands of cuts have been announced over the last few months, leaving many feeling nervous.Jonathan Baines is Chairman of Korn/Ferry. He's responsible for headhunting senior banking talent.
JONATHAN BAINES, CHAIRMAN OF KORN/FERRY SAYING:
"I think there is a sense of fear about the looming job cuts, certainly in some markets, less so in investment banking, certainly in those parts of the banks that have been generating their revenue from the western European markets."
Following public anger over excessive bank bonuses in the wake of the financial crisis, tougher regulations were brought in to limit bonuses.
Many banks responded by boosting base salaries, in order to keep their staff. But that's left them with an inflexible cost base that they now need to reduce.
Geoffrey Wood, Professor of Economics at Cass Business School says it's the result of government meddling and is calling for change.
PROFESSOR OF ECONOMICS AT CASS BUSINESS SCHOOL, GEOFFREY WOOD, SAYING:
"We certainly have moved to an increased core salary and very small bonuses. That of course removes flexibility which is why more workers are being laid off. It's silly not to have flexibility in an industry with highly volatile profits. So certainly we should think again about rebalancing the compensation pattern."
According to a Reuters source, Goldman Sachs is set to cut base salaries of some of its London investment bankers, as a two year pay rise deal comes to an end. Analysts believe other banks may follow suit, so that they can spare jobs.
But while things may seem downcast in Europe, it's a different story in emerging markets.
JONATHAN BAINES, CHAIRMAN OF KORN/FERRY SAYING:
"Hiring tends to follow the economic cycle - France, Germany - but Germany's exceptional. There's always a shortage of talent in Germany. But Western Europe is slow. Africa is in demand. Asia-Pacific is in demand. Middle East is in demand and emerging Europe is in demand."
But for those unable or unwilling to relocate, there is hope that things will ultimately pick up.
JONATHAN BAINES, CHAIRMAN OF KORN/FERRY SAYING:
"I'm sure we're in a cycle. It's just a question of how long it's going to take this cycle to play out. I would say that for the next twelve months we expect it to be slow."
Others believe the changes may be more lasting.
Kirsty Basset, Reuters.