Posted on 04/03/2008 5:20:25 AM PDT by raybbr
NEW YORK (AP) -- The U.S. financial industry has been shedding jobs at a record clip, and some analysts predict the pace will only accelerate over the next year-and-a-half as banks cut costs in the face of the housing market slump and the weak economy.
Analysts at the financial research firm Celent LLC said in a report Tuesday that it expects the U.S. commercial banking industry -- essentially, all companies that lend or collect deposits -- to lose 200,000 of its 2 million jobs over the next 12 to 18 months.
An annual loss of 200,000 jobs at the nation's commercial banks would be an unprecedented number.
In 2007, the entire financial services sector -- which consists of mostly commercial banks -- announced job cuts that totaled a record 153,000, according to the job placement consultancy Challenger, Gray & Christmas, Inc. More than half of those cuts were in the mortgage-lending business, and occurred all over the country, particularly in New York and California.
Octavio Marenzi, the head of Celent's financial consultancy unit, said more layoffs are inevitable as the subprime crisis hits other parts of the banking industry and spreads beyond mortgages to mortgage-related products, such as home-equity loans, and other types of lending, such as credit cards.
"The banking industry over the past 40 years has never seen a downturn in its revenue growth," Marenzi said. "In 2008, it looks like it will decrease for the first time in living memory. They're going to have to respond with severe cost cutting. It's not an environment they're entirely used to."
The credit crisis began in earnest last summer when the markets tightened up at the sight of spiking subprime mortgage defaults.
"There's no horizon yet that anybody can see," said John Challenger, who runs Challenger, Gray & Christmas. "New events keep rolling out ... suggesting that there's more to come."
Financial services companies announced in January that they were cutting 16,000 U.S. jobs, and companies said in February they were trimming 6,000 more, Challenger said. Those figures are below last year's peak in August when companies announced they were cutting nearly 36,000 jobs, but analysts expect further bloodletting in the coming months.
Many banks that have reported huge losses have so far not announced significant layoffs outside the mortgage area, Challenger added. Just Tuesday, Swiss bank UBS AG -- which has a big portion of its staff in the United States -- said it lost more than $12 billion in the first quarter.
And Celent's estimate does not include the securities industry, which currently employs some 800,000 people -- more than it ever has, after a multiyear hiring spree, Marenzi said.
The investment bank Bear Stearns Cos. has 14,000 staffers, and JPMorgan Chase & Co., the company buying the investment bank, has not yet announced how much of that staff it intends to keep. Meanwhile, Citigroup Inc. officially announced in January it was cutting 4,200 jobs globally, mostly in its investment banking business, but said there are more layoffs to come.
"What we haven't seen are big mega-layoffs -- tens of thousands of people in a large company," Challenger said. "It just feels to me there are big ones coming."
The banking industry is not the only one shedding jobs recently. Manufacturing and construction companies have been laying off workers for a couple years now amid the flagging housing market and weak automotive industry.
Though financial services employment has been contracting for the past few months, employment in other sectors -- such as wholesale trade, construction and public administration -- have been contracting at a faster pace, said Anthony Nieves. Nieves is the chairman of the Institute for Supply Management's survey committee for businesses outside the manufacturing sector.
And hiring does not appear to be at a total standstill in financial services. JPMorgan, for one, did more hiring than firing last year.
But the financial services industry is large, so its layoffs affect the broader job market significantly. In February, U.S. employers eliminated more jobs than they created for the second straight month, according to the Labor Department. The department releases its March report on Friday, and economists, on average, are expecting another net los
It's been happening for some time.
yeah. damm immigrants.
we're DOOMED and it's ALL GEORGE W BUSH'S FAULT.
We’ve got too many bankers. Now the manufacturing industry is back because of the declining dollar. We’ll see if those jobs are any better.
So maybe Mexicans will now be doing more “bank jobs”?
Glad to see that you are finally getting it.
...repeat it often enough and even a blockhead like me will eventually.
NOT!
ping
I would not believe a word of this.
The bulk of banking jobs are in operations areas that are already highly automated. How can they cut and still process checks and produce credit card statements?
As for the business front end, where reps meet with customers and do business, I don’t see much of a decline there either. The same business will still be there, even if the economy shrinks slightly.
One can only hope...
“How can they cut and still process checks and produce credit card statements?”
I found out that a lot of that operation has been outsourced to other companies. It’s so nice when you haven’t gotten your statement to call the bank and have the response be, “We don’t know where it is, another company processes those for us.”
Why, is MacDonalds laying off?
As far as bank tellers or telephone banking workers go, That isn't exactly a high paying job either.
I wouldn't bet on there being much of a "housing slump" either, aside from some hot spots like California where people got greedy, (which seems to be the only housing market that exists if you take media's and Chicken Little's word on it) is doing just fine.
Re: As far as bank tellers or telephone banking workers go, That isn’t exactly a high paying job either.
Simply because the jobs are “high paying” does not mean they create value. How many WS analysts make 7 figure incomes and yet are more often wrong than right? Sometimes, embarrasingly so.
Why are we doomed, and even if we were, why is it Bushes fault people are stupid and buy things they can't afford?
Now it's coming back to bite them in the ass.
Trouble is, they had to realize this would end badly. This makes me suspect something more *devious* is in the works.
Ummm.... Let's see. This admin pushed for people to buy homes. At every turn. Just so he could claim his legacy of "home ownership".
He opened the borders (de facto) and let millions of uneducated illegals in hoping they would buy homes and NOT SAYING A WORD when it was found out that these companies were giving mortgages to those illegals.
This admin has done all it could to prop up (tightening bankruptcy rules for individuals while leaving business bankruptcies alone) a banking system that WE all knew was acting irresponsibly if not fraudulently.
Really, though, I am not saying it's all Bush's fault but he certainly is not faultless.
The US and NYC business environment is evermore hostile. Why put up with extortionists like Elliot Spitzer and Jesse Jackson? Who needs the punishing taxes of NY, NYC, NJ and CT? What future is there in a country where the Federal Government is poised to Nationalize your business??
The US economy has lost its’ fat, muscle and now bones. The carcass is bare. Bankers with their money will move on. As will oil companys and others who recognize greater value in off-shore opportunities. Pity
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