Banks see massive layoffs

By Phien An   February 6, 2024 | 06:28 pm PT
Banks see massive layoffs
A Deutsche Bank employee in New York carries a potted plant home after its 2019 layoffs. Photo by AFP
Faced with difficulties that are expected to linger, large western banks are slashing costs by downsizing their payrolls and increasing the use of artificial intelligence.

Deutsche Bank has said it is laying off 3,500 employees, or 4% of its workforce, to reduce costs by 2.5 billion euros (US$2.7 billion) a year by 2025.

One of the ways the German lender has chosen to cut costs is to promote "simplified workflows and automation," and so most of the jobs will be shed in the back office. Its pre-tax net profit fell by 14% last year to 4.9 billion euros ($5.3 billion).

Deutsche Bank is the latest of a number of lenders to announce layoffs in recent months. UBS is cutting 3,000 jobs in Switzerland, where it is headquartered.

Citibank, the third largest American bank, last month said it would cut 20,000 jobs in the next two years, equivalent to 10% of its global workforce, to save $2.5 billion in the long term.

January was also when the U.S. financial industry laid off the most workers, 23,238, since Sept. 2018, according to a report by recruitment company Challenger, Gray & Christmas.

The layoff announcements continue in early 2024 amid massive downsizing by the global financial industry.

According to The Financial Times, major banks around the world axed more than 60,000 jobs in 2023, among the highest in a year since the financial crisis.

Citibank started sacking workers in November 2023.

In the U.K., a number of lenders, including Barclays, Lloyds and Metro Bank, announced staff reduction at around the same time.

Some banks cited increased automation and the use of artificial intelligence as reasons to reduce their payroll.
Lloyds is eliminating certain roles and only hiring data and technology personnel.

The downsizing is also intended to prepare for a more difficult business environment as rising interest rates impact the economy.

Deutsche Bank said it had increased provisions for potential bad debts by 300 million euros to 1.5 billion euros ($1.6 billion) in 2023, which reflected "the continued challenging impact of macro-economic and interest rate conditions," CNN reported on Feb. 1.

Investment banks, which had to slash wage costs last year, are expected to continue downsizing.

"There is no stability, no investment, no growth in most banks, and there are likely to be more job cuts," The Financial Times quoted Lee Thacker, founder of British financial services provider Silvermine Partners as saying.

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