Regulation, automation, volatility and low rates forcing banks to cut jobs, BNP Paribas to oust 675

Rick Steves

In recent years, the banking sector has been pursuing cuts in operation costs, to address issues such as increasing regulatory expenses, by selling parts of their businesses and branches, adopting more efficient technology, and reducing manpower, among others. Cutting on human resources may be accelerating as volatile financial markets have been affecting the banking business […]

BNP Paribas to reduce 675 positions

In recent years, the banking sector has been pursuing cuts in operation costs, to address issues such as increasing regulatory expenses, by selling parts of their businesses and branches, adopting more efficient technology, and reducing manpower, among others. Cutting on human resources may be accelerating as volatile financial markets have been affecting the banking business with tremendous effect, with a slump of 15% in market trading revenue in Q1 2016 only, when usually it is the most lucrative period. Deutsche Bank CFO said in March that the first two months were the worst start to a year for banks that he has seen in his banking career.

Most recently it has been reported the imminent 70 redundancies across Citigroup’s London trading units, adding to the incoming 200 jobs reduction in Europe, in operations and technology. The company has made public a plan to cut jobs by 30% within the next 10 years as adoption of automation increases.

Following a pre-tax loss of CHF 2.442 billion for the year of 2015, Credit Suisse Group AG (ADR) (NYSE:CS) it was reported in February that the group was preparing a 4,000 job cut, but further developments have come up since late March. The bank will add 2,000 to the redundancies plan, totaling 6,000 employees and targeting savings from CHF 3.5 billion to CHF 4.3 billion by the end of 2018.

CEO Tidjane Thiam said: “We are taking action to lower the cost base of Global Markets by reducing headcount by 2,000. This will drive a decline in the Global Markets’ cost base from USD 6.6 billion to USD 5.4 billion by end-2018.”

Nomura, Japan’s largest interbank brokerage, is set to close its derivatives business, reduce its European equities unit, and lose between 500 (Reuters estimate) and 1000 jobs (Nikkei estimate) following weaker numbers: net income down by 49% in Q3 2015. The restructuring plan will be announced following after the publication of the annual results of 2015.

Santander has announced in April a plan to save up to €3 billion by the end of 2018, consisting in closing 450 branches in Spain and make approximately 1,000 (3%) of employees redundant, totaling staff in branches and corporate center.

The most recent job cut announcement came from BNP Paribas, planning to reduce its investment banking division by 675, from a total of 30,000 approximately, with a focus on voluntary departures. The decision is expected to save up to €1 billion in annual costs at the securities unit by 2019, with plans to reduce spending in its investment banking business by 12%.

Pressure from tougher regulatory requirements, volatile markets and sharply low interest rates are forcing these decisions by investment banks, mostly European.

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