Financial services braced for job losses

by Dave Nixon

Story link: Financial services braced for job losses

Up until now most London banks have trimmed only those jobs directly affected by the US housing crisis, their structured credit trading desks. Credit Suisse dropped the headcount in its securities unit by about 150 in the UK this year, while Deutsche Bank said about 120 UK jobs would go from its global markets division.

Banking experts say investment banking is facing the most awful crisis in 30 years and forecast that revenues will fall as much as 45 per cent this year. But they remain in defiance about the impact on jobs.

According to research by Morgan Stanley and Oliver Wyman, the financial consultancy, a mixture of writedowns on exposure to the troubled US mortgage market and weaker revenues across many investment banking business lines has cost the industry comparable of six financial quarters of earnings.

This means that considerable job losses across the entire areas of the City will happen this year. Estimates this week from JPMorgan suggest more than 40,000 jobs will go this year.

Samuel Johar, chairman of Buchanan Harvey, the FTSE 100 headhunter, says the sting is not being spread evenly but will affect all areas of the City.

Commercial property is already feeling the hurt. Fewer workers signify a reduced amount of need for office space. London office rents declined for the first time in four years during the first quarter and are predicted to fall a further 11 to 12 per cent in 2008.

Elsewhere, Hays, the country’s largest recruitment agency, is freezing its UK headcount.

City law firms, though, have yet to be hit by the decline in revenues.

Knowing how deep to score is also a tricky decision for the banks to make. But keeping miserable bankers on the payroll can be just as much of a challenge.