The 2012/01/20 at 06:50
Successively weakened by the 2008 financial crisis and the sovereign debt crisis in Europe, European banks are in the midst of strategic reorientation. Called on to submit to new regulatory restrictions issued by regulation authorities, many of them have decided to sacrifice a large share of their financing and investment activities to refocus on retail banking. By increasing the capital costs of financing and investment activities, the new prudential standards promulgated by the Basel Committee on Banking Supervision have a long-term impact on the profitability of banking establishments and are leading them to adjust their portfolio of activities. These adjustments take into account of more context-related difficulties, for example problems with access to liquid funds, namely for financing in dollars.
Finally, the situation is compounded by a morose macroeconomic context and stock market instability that paralyse merger and acquisition activities. It is HSBC that heralded an acceleration of saving plans by announcing, at the start of August, the suppression of around 10% of its staff, in other words 30,000 jobs, by 2013. Most European banks have followed in the same direction, in varying proportions. As far as French banks go, BNP Paribas announced the suppression of 1,396 jobs worldwide, exclusively in financing and investment activities. At Crédit Agricole, the loss of 2,350 jobs is envisaged, three-quarters in the financing and investment branch, the others in specialised financial services (consumer credit, factoring and credit leasing), just as greedy for capital and liquid funds. The austerity onslaught also affects the BFI of the Société Générale, where 1,600 job cuts have been announced, in other words over 13% of staff in this activity covered by some 12,000 employees worldwide.
On the other side of the Channel, the Royal Bank of Scotland has decided to eliminate numerous activities from the investment bank. The upshot is that 3,500 extra jobs will be cut in this banking sector, after the 2,000 already announced in August 2011. In one year from now, these professions, which, before the crisis, were covered by 24,000 persons, are expected to employ only 13,500. As a symbol of the excesses of the credit bubble, RBS, in which taxpayers had to inject 45 billion pounds (54.19 billion euros), has announced almost 35,000 job cuts since its salvaging. “Our goal from these changes is to be more focused for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall,” explains RBS Chief Executive Stephen Hester. American banks have not been spared either. They have announced almost 40,000 job cuts in recent months, in the vein of Bank of America that foresees cutting its staff by 30,000 jobs over five years. The golden age of the 2000s seems over for market finance.