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Financial Services Groups Cut 9,000 Jobs

The financial services sector has cut 9,000 jobs over the past three months as business volumes and profitability fell for the first time in more than three years, the CBI employers’ group and PwC have reported.

Martin Wheatley, managing director of the Financial Services Authority (FSA), speaks during a news conference at the Mansion House, in London, U.K., on Friday, Sept. 28, 2012.
Simon Dawson | Bloomberg | Getty Images
Martin Wheatley, managing director of the Financial Services Authority (FSA), speaks during a news conference at the Mansion House, in London, U.K., on Friday, Sept. 28, 2012.

were deepest in banking, which has been beset by a scandal over the Libor benchmark interest rate and a slowdown in investment banking revenues.

The findings, from a survey of 104 companies, contrast with signs that the economy may be returning to growth.

Financial services groups think growth in business volumes will resume in the next quarter, according to the CBI/PwC survey but they also expect to cut 3,000 more jobs.

The uncertain employment outlook was reinforced by Morgan McKinley, a City recruiter, which said new vacancies in the London financial market fell 19 per cent last month compared with August and 43 per cent compared with a year ago.

Hakan Enver, operations director, warned that the strain on banks might lead them to delay recruiting decisions until the new year.

Matthew Fell, CBI director for competitive markets, said the financial services sector had faced a tough quarter, with sales volumes unexpectedly falling and average costs rising, thus denting profits. Sentiment about the business situation also continued to fall.

Nevertheless, he said, companies expected the weakness in activity to be temporary and predicted a return to growth in business volumes and incomes in the next quarter.

Mr Fell added: “Uncertainty about demand, heightened by the need to fully resolve the ongoing euro one crisis, and the looming US fiscal cliff, means that firms are scaling back their investment intentions for the coming year and reducing headcount.”

Business volumes fell in banking, general insurance and securities trading but rose in life insurance, building societies and investment management.

Kevin Burrowes, UK banking leader at PwC, said: “The outlook for banking is dominated by concern about weak demand, seen as the greatest threat to growth and the leading barrier to investment, and the growing costs of regulation.”

The Centre for Economics and Business Research, a forecaster, expects the City to have lost more than 30,000 jobs this year, taking the total below 255,000 – the lowest level since 1996.

That means the City will have lost about 100,000 jobs, or more than a quarter, since its workforce peaked at 354,000 in 2007, before the financial crisis.


Across the country, the financial services sector employs 1.14m people and contributes 9 per cent to economic output.

Astbury Marsden, another City recruiter, put last month’s dip in vacancies at 15 per cent after a relatively stable summer.

“The last quarter has seen two of the UK’s most successful banks put in the stocks, the widening of the Libor scandal and announcements by a number of banks to continue to scale down their investment banking operations. It has proved to be an unexpectedly bad summer for bankers,” said Mark Cameron, chief operating officer.

“Politicians, regulators and other government agencies here and in New York now need to be careful not to cause the sector unnecessary collateral damage.”

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