BOB MOON: Some of the biggest layoffs are coming in the banking sector. Job cuts announced by HSBC, Barclays and others already total close to 50,000 globally, starting now and continuing in the coming years. Why so much pain in the financial sector?
From London, Marketplace’s Stephen Beard reports.
STEPHEN BEARD: Call it an aftershock or a delayed reaction. Many banks are still suffering from the crash of 2008. They’re suffering in two ways. The battered economies of the U.S. and Europe are flagging, so bank revenues there are wilting. And then there’s the regulatory backlash. After the earlier lending excesses banks are now required to hold more cash in reserve. And that makes them less profitable. Peter Thal Larsen of Breaking Views:
PETER THAL LARSEN: Banks are being squeezed from both sides. The amount of capital they are holding is going up, and the amount of business they’re doing is going down. And that is depressing their returns. One of the ways you improve your returns is by cutting costs and that means paying people less and — ultimately — firing them.
HSBC alone has unveiled a further 25,000 job losses this week. But the bank has benefited from diversification. It’s seen double digit growth in Asia and Latin America.
In London I’m Stephen Beard I’m Stephen Beard for Marketplace.
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