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European banking jobs - Career breaks

2016-10-11 11:13:33

A grim new world, one with fewer bankers

Oct 8th 2016

FRANK LLOYD WRIGHT quipped that the modern city is a place for banking and

prostitution and very little else. Little did the early 20th-century architect

know how banks would flourish, hoovering up much of the world s talent by the

early 2000s. But this golden age is ending: bankers jobs are at risk from the

digital revolution on the one hand, and falling profits on the other.

Nowhere have bankers fallen from grace with such a bump as in Europe. This week

ING, the Netherlands largest bank, announced that up to 7,000 jobs would be

cut in the next five years. Commerzbank, Germany s second-largest bank, had

already reported it would cut its workforce by 9,600, nearly a fifth.

Across Europe, bankers are packing up. In Britain more than 10% of bank jobs

were cut between 2011 and 2015; in Germany the workforce has shrunk by around

20% since 2001. Since the start of the year Credit Suisse has got rid of nearly

5,000 jobs and Barclays has shed 13,000. In Spain Banco Popular is cutting

about one-fifth of jobs. Desperate times call for desperate measures, notes

Naeem Aslam, of Thinkmarkets, a broker. With today s low interest rates, slow

growth and rising regulatory costs, it is much harder for banks to be

profitable.

In such a choppy environment, costs are one of the few things a bank can

control and these come primarily from the workforce. By cutting headcount and

branches, frugal Scandinavian banks have brought their cost-to-income ratio, a

measure of efficiency, down to the mid-40s. The European average is around 60%.

But at Commerzbank the ratio is 79% and at Deutsche Bank 89%.

Brexit complicates matters further. A report this week by Oliver Wyman, a

consultancy, estimated Britain might lose 35,000 jobs in financial services.

Thorsten Beck of Cass Business School in London thinks some jobs will move to

the euro zone. But others might be gone for good because of rigid labour laws

and because some might be less worthwhile inside the euro area than in London.

Young people have heard enough: whereas in 2007 around 28% of MBA graduates

from INSEAD, a European business school, chose a career in finance, last year

only 15% did. Within that group fewer are opting for investment banking. That

is good news for talent scouts at tech companies; bad news for tailors of

bespoke pinstripe suits.