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DatabankJanuary 14 2016

European banks quicker to cut staff than US lenders

Since the 2008 financial crisis, European banks have shed a significantly higher proportion of their workforce than their counterparts in the US. 
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Employment numbers at globally systematically important banks (GSIBs) have decreased far more at European institutions than at their US counterparts, data from these banks show.

Chart one

At the peak of the 2008 financial crisis, European banks that are now designated as GSIBS had 2.19 million people on their payrolls. That number has been decreasing steadily since, dipping to less than 2 million in 2012, and, according to the figures from the end of 2014, it now sits at 1.91 million (see chart one).

US GSIBs, on the other hand, managed to keep their headcount relatively steady over the past seven years. Employment actually peaked in 2011 at 1.25 million, and has inched down since to 1.14 million at the end of 2014.

chart two

Which banks have been the main force behind dismissals? The largest reduction in absolute numbers came from RBS which reduced its workforce by 90,300 people between 2008 and 2014, or 45% of its total headcount (see chart two). The second largest decline came from Citigroup, where the payroll shrunk by 81,800 employees in the past seven years. Bank of America is third, as its headcount decreased by 64,000 employees since 2010, when the bank had the largest number of staff (see chart three).

chart three

This was contrasted by steady employment figures at other US banks. JPMorgan Chase enacted only modest cuts among its staff in the recent years, a 7% decline since 2011, when the bank’s headcount peaked. The same can be said of Goldman Sachs and BNY Mellon, both of which currently hire nearly the same amount of people as they did seven years ago. Another GSIB, State Street, even managed to increase its number of employees by 1495, relative to 2008.

In Europe, cuts were larger across nearly all banks. Dutch ING has cut 45% of its workforce since 2008, when it received a state sponsored bail-out, while other big players, HSBC and UniCredit, have also seen a sizeable portion of their workforce go over the past seven years – HSBC’s staff shrunk by 59,000 and UniCredit’s by 43,971 since 2008.

There was one bank, however, that defied the trend and expanded its operations – Standard Chartered. The bank made a strategic decision to bulk up in Asia, where it has a large part of its operations. However, most of this expansion will be rolled back in the coming year. Standard Chartered recently appointed a new CEO, who is taking an axe to the bank and plans to shed 15,000 jobs.  

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