GLOBAL banks have slashed almost 160,000 jobs since early last year, including more than 21,000 across taxpayer-backed lenders Lloyds Banking Group and Royal Bank of Scotland, and more lay-offs are in the pipeline as the industry restructures.
Redundancies in the banking sector have outpaced new hires by roughly two-to-one according to a study that shows job cuts have been heavier in Europe than in Asia or the US.
It is feared that the final tally could rise even higher, as smaller banks and brokers are also cutting staff or shutting up shop, and bigger banks have not always disclosed target numbers for lay-offs.
According to analysis by Reuters, 29 major banks have unveiled plans for 157,969 job cuts since 2011, including 15,000 at Lloyds and 6,418 at RBS. The study also showed that about 83,000 roles have been created globally in the sector since the height of the financial crisis.
Job losses in the banking sector hit the UK particularly hard, as the industry accounts for about 10 per cent of the economy.
Well-paid investment bankers are bearing the brunt of cost cuts as deals dry up and trading income falls. That is particularly the case in some activities such as stock trading, where low volumes and thin margins are squeezing banks.
Earlier this week, the Centre for Economics and Business Research warned that tax income from the City could drop to around £40 billion this year, compared to £70bn in 2007-8, when the financial crisis hit. The think-tank also said that total City bonuses paid around the end of this year are predicted to fall to £1.6bn – down from a peak of £11.6bn in 2008 and lower than the £2.3bn it forecast just six months ago.
Squeezed by regulations forcing banks to store up more capital in their trading businesses, firms are likely to shrink their investment banking units even further as they overhaul their models to survive.
Last month, Swiss bank UBS revealed plans to cut up to 10,000 jobs by 2015 as it downsizes its investment banking business and drops risky trading activities, and chairman Axel Weber warned that many of its rivals may have to follow suit.
Workers in retail banking operation will not be immune to job cuts either, particularly in slowing European economies, while mergers and acquisition dealmakers are also coming under pressure.
Figures from Reuters show that fees in this area are down 21 per cent worldwide to $13.9bn (£8.8bn) in the first nine months of this year.
Caio Gilberti of consultancy AlixPartners said: “There are still 300,000 too many full-time employees in the top financial services players in Europe.”
He estimated that banks could shave slightly more than €20bn (£16bn) off their collective cost base by cutting those posts.
As banks shrink, fewer of those leaving are able to find equivalent jobs at rivals, and only a small proportion are qualified to move into other jobs, for example at hedge funds, which look for specialised, skilled traders.
One executive at an international bank in London, who asked not to be named, said: “When I let go tons of people in cash equities this year, I knew most would be finished in this business. It is pretty dead.
“Some will just have to find something completely different to do.”