Daily Management Review

Investment banks laid off 30 thousand employees since April 2019


08/13/2019


Over the past few months, the largest investment banks in the United States and the EU announced a total dismissal of about 30 thousand employees amid falling trade volumes, costs optimizations, automation and actions of the authorities of developed countries.



AMISOM Public Information
AMISOM Public Information
The bulk of the layoffs in the current staff reduction cycle came from European banks. According to the Financial Times, the layoffs were announced in the investment divisions of Barclays, Citigroup, Deutsche Bank, HSBC, Société Générale and several other companies; the largest share of announced layoffs came from Deutsche Bank. This is about 6% of the global volume of employees in the banking sector.

Apart from internal problems of the largest German bank, a number of other factors also play a role in the forced cost reduction and the dismissal of employees in most investment banks in Western countries. There is a decrease in trade volumes and continued introduction of automated trading in the form of various trading algorithms.

In 2018, as noted by FT with reference to the data of the research company Coalition, the total profit of the world's largest banks from trading in the foreign exchange, debt and commodity markets fell to the levels of 2006.

Edward Firth, an analyst with investment banking company Keefe, Bruyette & Woods, notes that investment banks are facing a “structural choice” amid falling profits from trading in financial instruments. According to him, banks continue to actively assess the need for personnel against the backdrop of these trends to reduce profits and automate trade.

In addition to the ongoing development of technology, additional pressure for banks is coming from the ever-increasing spread of negative interest rates. This, in particular, was recently announced by the head of Barclays Bank, Jes Staley. He noted that such an ultra-soft monetary policy makes life difficult for banks.

source: ft.com






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