Large-scale layoffs now thought likely.
European banks, which eliminated more than 140,000 jobs in two years, are poised to keep shrinking.
Bloomberg News reports that firms in the region probably will cut at least 5% of trading and advisory staff next year, according to a survey of three London-based investment-bank recruiters, and the reductions could reach 15%, two of them said. That would be twice the 7% shrinkage across the industry since 2011.
'As European banks focus on leverage, they’re losing market share to U.S. firms', said Philippe Bodereau, the London-based head of European credit research at PIMCO. 'We’re seeing a lot of banks that are starting to cut balance sheets. Cost control will remain a big item'.
About 3,000 front-office jobs probably will be eliminated in 2014 at the 10 largest global securities firms, and the cuts could exceed 6,000 across the industry, Matt Spick, a London-based analyst at Deutsche Bank, wrote in a note to clients Wednesday. Banks may exit some fixed-income businesses and will need to improve productivity in equity sales and trading, Spick wrote.
'This downturn isn’t just cyclical', Thierry Varene, head of BNP Paribas SA’s investment-banking business in Europe, said in an interview. 'It’s unusually long'.
McKinsey said in an annual review of the investment banking and trading industry last month: 'The extent of the challenges facing the current business model suggest there is a serious question over its viability', the consultants wrote. 'The mathematics of the old world view no longer add up'.
image: © Torpe