60,000 jobs cut at Europe’s biggest banks
(7 December 2019 – United Kingdom) Hemmed in by the European Central Bank’s long-term extension of negative rates, slowing economic growth, Brexit and burgeoning regulatory requirements, lenders across Germany, UK, France, Spain and Switzerland have collectively announced more than 60,000 jobs cuts this year.
For the top ten banks in Europe, staff numbers have fallen a fifth since 2008 to 1.1million. By contrast, the fall is roughly 7 percent for the top ten in the US.
Many of these have come from the region’s struggling investment banks, which are suffering from a general decline in the revenue pool as well as continued market share losses to US rivals.
Moody’s, which this week changed its outlook for global banks to negative from stable, warns that the “profitability gap between euro-area banks and global peers will widen further” in the medium term despite the large headcount reductions.
Cuts at Deutsche Bank have been the most severe. After its failed merger attempt with Commerzbank, chief executive Christian Sewing announced a retreat from investment banking over the summer, resulting in 18,000 job losses and the creation of a new “bad bank” to dispose of €288 billion of unwanted assets.
The next few years could bring even more pain for bank employees with many of the region’s top lenders positioning themselves for a potential wave of consolidation that could begin as Europe’s politicians and regulators soften their opposition to a full banking union.
That would clear the way for cross-border mergers that would inevitably bring more “rightsizing” as overlaps are eliminated and digitisation continues to take work from humans, especially in retail divisions and branch networks.