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Banks cut 60,000 jobs amid one of toughest years since 2008 financial crisis

Banks cut 60,000 jobs amid one of toughest years since 2008 financial crisis Banks cut 60,000 jobs amid one of toughest years since 2008 financial crisis (Getty Images)

Global banks underwent significant workforce reductions in 2023, cutting over 60,000 jobs - a level of cutbacks not witnessed since the 2008 financial crisis, according to Business News.

As the financial institutions emerged from the challenges posed by the COVID-19 pandemic, they reversed their hiring trends, the media says.

Lee Thacker, owner of financial services headhunting firm Silvermine Partners, commented “At most banks, there is no stability, no investment, no growth – and more jobs are likely to be cut.”

The investment banks saw a second straight year of declining fees because of a slowdown in dealmaking and public listings, prompting Wall Street to reduce headcount to protect profit margins.

Financial Times data

According to the Financial Times estimates, the world's 20 largest banks will cut at least 61,905 jobs in 2023. While this is a substantial figure, it falls short of the more than 140,000 jobs cut by similar institutions during the global financial crisis of 2007–2008.

However, the data, compiled using company disclosures and independent reporting, focuses on major banks, excluding smaller institutions and minor staff reductions. The total job losses in the sector are anticipated to be higher.

Unlike previous years, when European lenders struggling with historically low interest rates drove massive job losses, at least half of the 2023 cuts originated from Wall Street. The challenges it faced included difficulties in adapting to the rapid pace of interest rate increases in the U.S. and Europe.

What banks are cutting jobs

Switzerland's UBS emerged as the top contributor to job cuts, having already eliminated 13,000 positions bringing the total headcount to 116,000 after it acquired Credit Suisse.

Wells Fargo, the second-largest contributor to job cuts in 2023, revealed a reduction of its global workforce by 12,000 to 230,000.

Major Wall Street banks, including Citigroup, Morgan Stanley, Bank of America, Goldman Sachs, and JPMorgan Chase, collectively plan to cut at least 30,000 jobs in 2023. The decision is attributed to insufficient revenues, prompting a response to overexpansion and political cost-cutting measures.

“The revenues are not there, so this is partly a reaction to overexpansion. But there is also a simple explanation: political cost cutting,” Thacker said.

European banks

Despite a general trend of job cuts affecting less than 5% of staff at global banks, Metro Bank in the UK announced plans to cut a fifth of its workforce as part of a refinancing deal. The bank aims for annual savings of £50 million, resulting in branch closures and the loss of 800 staff.

While some prominent banks, such as HSBC and Commerzbank, have no plans for staff cuts in 2023, the outlook for global banking jobs remains uncertain. UniCredit, Italy's second-largest lender, continued its workforce reduction as part of an efficiency drive but did not reveal prominent redundancies in 2023.

The overall projection for global banking jobs in 2024 remains conservative, with expectations that the trends seen in 2023 will persist.

International banks leaving Russia

In addition to global economic issues, major European and American banks are leaving Russia because of its unprovoked full-scale invasion of Ukraine.

On December 22, the U.S. allowed the UK's largest bank to sell its business in Russia.

One of France's largest banks, Societe Generale, will soon sell its business in Russia and exit the market of the aggressor country.