Massive Job Cuts In Global Banks Amid Economic Downturn

Global banks cut over 60,000 jobs in 2023, marking one of the largest downsizing efforts since the financial crisis.

How was the banking business in 2023?

The year 2023 witnessed a major reduction in the banking sector's workforce, with more than 60,000 jobs cut by twenty of the world's largest banks, as reported by the Financial Times. This scale of reduction is second only to the global financial crisis of 2007-08, which saw over 140,000 jobs slashed. These cuts were primarily driven by a slump in dealmaking and listing activities, particularly affecting investment banks. Notably, half of these reductions originated from Wall Street lenders, who are adjusting to rapid interest rate increases in the US and Europe.

Major Banks Leading The Job Cuts

The merger of Credit Suisse and UBS has been a major contributor to job losses, with at least 13,000 roles eliminated in the combined entity. UBS's CEO Sergio Ermotti hinted at more cuts in 2024, considering it a pivotal year for the takeover.

UBS Registers First Loss In Six Years Amid Credit Suisse Acquisition
UBS records a $785 million loss due to costs incurred from the Credit Suisse acquisition, marking its first quarterly loss since 2017 amidst a strategic wealth management expansion.

Wells Fargo also announced significant headcount reductions, with a global workforce now standing at 230,000, having spent $186 million on severance costs in just one quarter. Other Wall Street giants like Citigroup, Morgan Stanley, Bank of America, Goldman Sachs, and JPMorgan Chase collectively cut about 30,000 staff in 2023. The cuts reflect not only a response to reduced revenues but also a strategic move towards cost-cutting under political pressure.

Contrasting Approaches Among Banks

While substantial job cuts were prevalent, some banks like HSBC, Commerzbank, and UniCredit refrained from major staff reductions in 2023. These institutions had already undergone significant workforce downsizing in recent years. In contrast, the UK's Metro Bank announced plans to cut a fifth of its workforce after a £925 million refinancing deal and a decline in mortgage lending capital relief. The decision aims at annual savings of £50 million, resulting in branch closures and up to 800 staff departures.

Future Outlook For Banking Jobs

The trend of job cuts in the banking sector is expected to continue into 2024. Gaurav Arora from Coalition Greenwich anticipates a conservative approach from banks, suggesting a possible extension of the current downsizing trend. This outlook is aligned with the broader economic context, indicating a cautious stance in the face of uncertain dealmaking prospects. Barring a significant revival in investment banking activities, the job market in global banking is poised for continued challenges.

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