UK banks trim 189,000 jobs bringing employment to 9yr low
Thousands of jobs are targeted as British banks centered in LIBOR rigging and insurance mis-selling scandals continue to cut costs.
Royal Bank of Scotland, HSBC, Lloyds and Barclays will employ about 606,000 people worldwide by the end of 2013, according to Bloomberg. That’s 24 percent below the peak of 795,000 in 2008 and the least since 2004, when they employed 594,000 globally. Bank layoffs are adding to the UK's current 7.8% unemployment.
The firms are under pressure to reduce costs as bank’s incomes shrink due to the Europe’s sovereign debt crisis suppressing lending. The four firms posted £108 billion ($164 billion) of revenue for 2012, 13 percent less than in 2008.
“The continuing cost-cutting announcements you’ve been getting reflect an incredibly difficult revenue environment and that’s new,” Bloomberg quotes Simon Maughan, an analyst at Olivetree Securities Ltd.
“The big bulky mass layoffs, such as they were, are probably gone, but that’s not to say staff numbers wont drift lower because it’s a struggle to grow the top line”, he adds.
More cuts may follow as RBS and HSBC have recently announced they are continuing layoffs as part of the restructuring process.
The job losses at RBS were announced after the bank’s annual general meeting was hit with shareholder protests over its £607m of bonuses awarded to executives last year when it lost £5.2bn.
Last year, the British banks have been at the center of LIBOR rigging and insurance mis-selling scandals , that costs Barclays’ a $4.1 billion charge. Reports suggest, increasing litigation costs and mounting losses have necessitated aggressive cost cutting – which results in the layoffs.
Last year RBS, the biggest state-owned British bank, was fined $610m by UK and US authorities for its part in the Libor rate-fixing scandal. The bank’s annual losses ballooned to $9.05 billion in 2012 from $3.03 billion in the previous year.
During its annual general meeting this month, RBS chairman Sir Philip Hampton admitted that it had, like other banks, been through a "chastening" year in 2012 "fixing the mistakes of the past but also laying the foundations for a secure, profitable future"