200,000 U.S. Banking Jobs at Risk
April 2nd, 2008Via: AP:
The U.S. financial industry has been shedding jobs at a record clip, and some analysts predict the pace will only accelerate over the next year-and-a-half as banks cut costs in the face of the housing market slump and the weak economy.
Analysts at the financial research firm Celent LLC said in a report Tuesday that it expects the U.S. commercial banking industry — essentially, all companies that lend or collect deposits — to lose 200,000 of its 2 million jobs over the next 12 to 18 months.
An annual loss of 200,000 jobs at the nation’s commercial banks would be an unprecedented number.
In 2007, the entire financial services sector — which consists of mostly commercial banks — announced job cuts that totaled a record 153,000, according to the job placement consultancy Challenger, Gray & Christmas, Inc. More than half of those cuts were in the mortgage-lending business, and occurred all over the country, particularly in New York and California.
Octavio Marenzi, the head of Celent’s financial consultancy unit, said more layoffs are inevitable as the subprime crisis hits other parts of the banking industry and spreads beyond mortgages to mortgage-related products, such as home-equity loans, and other types of lending, such as credit cards.
“The banking industry over the past 40 years has never seen a downturn in its revenue growth,” Marenzi said. “In 2008, it looks like it will decrease for the first time in living memory. They’re going to have to respond with severe cost cutting. It’s not an environment they’re entirely used to.”
The credit crisis began in earnest last summer when the markets tightened up at the sight of spiking subprime mortgage defaults.
“There’s no horizon yet that anybody can see,” said John Challenger, who runs Challenger, Gray & Christmas. “New events keep rolling out … suggesting that there’s more to come.”
