Big investment banks in Europe, including Nomura, Credit Suisse and UBS, are stepping up plans to cut jobs as they seek to adapt to a drastic slowdown in revenues and tighter regulation.
Bank executives, headhunters and analysts say that the cuts are shaping up as the deepest since the start of the financial crisis after a disappointing summer dashed hopes of a business revival.
One senior headhunter said many large investment bankswill have “at least 20 percent” fewer staff in capital markets and M&A advisory business in Europe by the end of the year compared with late 2011.
“It [the market] has never been as bad as this. Bankers have long lost confidence in their banks but now they are also losing their self-confidence, their mojo,” a senior advisory banker said.
The Center for Economics and Business Research will soon revise upwards its previous forecast that 25,000 jobs in the City of London will be cut this year, according to the consultancy’s economist Rob Harbron. This would take the number of banking jobs in Europe’s main hub for investment banks below 255,000, a level last seen in 1996.
Among the banks that will reduce their investment banking workforce is Japan’s Nomura, where London-based bankers say that they expect several hundred jobs to be removed in Europe alone as part of a $1 billion cost-cutting effort.
Switzerland’s largest bank UBS , which cut staff levels earlier than rivals by announcing 2,000 job cuts in the investment bank after a $2.3 billion unauthorized trading loss last year, is preparing for intensified cuts as it is seeking to streamline further the unit, several people familiar with the situation said.
At Credit Suisse , insiders estimate that the additional SFr1bn ($1 billion) in groupwide cuts that were announced in July will translate into up to 1,000 jobs being lost, most of which would be in the investment bank.
Analysts expect also Deutsche Bank and Barclays to reduce their headcount further this year. Deutsche said two months ago it would reduce staff levels by 1,900.
This year the 10 largest global investment banks have reduced their front-office staff in sales and trading, advisory and capital markets by 4 percent, according to Coalition, a research firm. Back-office cuts are expected to be even higher.
This shake-up is set to differ from the standard seasonal practice of investment banks to adapt capacity across the board after the summer lull.
Albert Laverge, head of global investment banking practice at Egon Zehnder, said: “What we are seeing now is real restructuring where banks are cutting back some areas so they will be able to reinvest in others.”