Chillin' out till it needs to be funded
It is no secret that the British are in favor of a lot of job losses in the banking sector. Lloyds plan to lose 15K jobs came as no surprise. In no small measure, HSBC is also going to cut 850-1000 staff in the UK as it meets the stiffer cost reduction targets from its non focus markets including the ones at home in the UK. In fact from Thomas Casserella to Rob Cissell (Walmart India) , everyone is thinking of cutting jobs again these days but mostly banks as the jobs report get consistently optimistic except for public sector jobs
2008 was probably the only time when Goldman Sachs, Merrill Lynch, Morgan Stanley and JP Morgan followed the retail banks when the economy as a whole shed 9 million jobs. Yet, even as job reports got rosier fo everyone else, the coming revenue crunch, still led by Fixed Income trading is going to spawn more layoffs according to a Reuters Insider series.
The reason is clear enough. The conversion of performance bonuses to Fixed Salaries made banks go belly up on costs and with revenues dipping earnings estimates at most have been cut by half. Even if Goldman Sachs reduces just 3000 jobs from New York and London it could end up saving an annual $1.2 billion in (fixed)compensation costs alone. On the anvil is a plan to accelerate the annual attrition plan from now itself to save as much as it can for Q3. Similar cuts are likely at J P Morgan thought he reasons for layoffs at Bank of America and Citi would be slightly different they would be just as much in a hurry to get income statements back into shape with some “real” cost cutting.
However if and when market conditions improve the Big 4 could hire back the same talent in quick time. Goldman Sachs has hired more in India and Brazil this summer, Brazil and Singapore being active in trading with the Reais at a new 6 year high against the dollar.