Chastened banks cut tens of thousands of jobs

Mike Corbat , Citigroup CEO. SIMON DAWSON / Bloomberg News
Mike Corbat , Citigroup CEO. SIMON DAWSON / Bloomberg News
Posted: April 26, 2013

NEW YORK - Banks aren't the big job machines they used to be.

One after another, major financial firms are trimming their payrolls. In first-quarter earnings announcements this month, Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley revealed that they had cut more than 31,000 jobs, or 3.5 percent of their combined workforce, in the last year.

For three of those banks, it was the second straight year of cutbacks. And the pattern is being repeated around the world.

The losses are an unwelcome reminder of the recession and its lingering effects. A slow, halting recovery has kept loan demand in check. Low interest rates are crimping profits. New regulations extinguished old sources of revenue, and compliance is expensive. The cuts also reflect advances in technology that have made tellers more expendable.

Steven Mann, chairman of the finance department at the University of South Carolina's Moore School of Business, says many of his students have given up on banking jobs.

"In 2005, 2006, 2007, I'd ask, 'Do you want to go work at a bank?', and the answer was always yes," he says. "Now the answer is, no one. They want to be in the treasury department of General Electric."

Citigroup's new CEO, Mike Corbat, hired to turn around a bank that has struggled both since the financial crisis and beforehand, says examining costs and improving efficiency should be "business as usual" and "not just an annual event."

What makes the situation especially harsh is that there were signs in 2010 and 2011 that banks would start hiring. Banks added about 45,600 positions in the United States in 2010 and 2011 combined, according to data from the Federal Deposit Insurance Corp. In the previous two years, they shed more than three times that many jobs.

Then, last year, job growth was essentially flat. Some observers worry that the turnaround won't happen. The industry's total U.S. workforce of 2.1 million is 105,000 less than it was at its peak in 2007.

Citigroup also is cutting back in lower-growth countries, like Greece and Spain. Germany's Commerzbank and others are laying off branch workers as customers gravitate toward online banking. Barclays is exiting businesses with "reputational risks" after some of its bankers were caught manipulating global interest rates.

Even JPMorgan, generally considered one of the nation's strongest banks, is retrenching. It will cut a net of 17,000 positions, or 6.5 percent of its staff, over the next two years, mostly in the unit that deals with troubled mortgages.

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