More Heads Will Roll
Banks firing workers at alarming rate.
According to CTPartners, an executive search firm, the ranks of financial professionals are shrinking so fast we could "go back to the investment banks of the 1960s and 70s."
Brian Sullivan, the firm's chief CEO, told Bloomberg layoffs in the financial industry could double by the middle of next year. As many as 350,000 people may lose their jobs before it's all said and done. "This is the financial equivalent of World War II. It's unprecedented. You're seeing a seismic shift in the population of banking."
With Citigroup's (C) recent announcement of more than 50,000 job cuts, the headcounts at banks, insurance companies and other financial service firms continue to shrink.
As credit markets seized up last year, banks began to lose access to easy leverage. For years, Citi, along with former investment banks Goldman Sachs (GS) and Morgan Stanley (MS), grew massive trading operations to supplement their traditional role as transaction advisors, research firms and brokerages.
Now that those business lines are suffering massive losses, forcing banks to shutter operations and pare back risky positions. Former traders, structured finance wizards and salespeople are finding their services are no longer needed.
And job losses aren't just being felt in the ivory towers of Wall Street.
Washington Mutual, the Seattle-based thrift that collapsed in September and was snatched up by JPMorgan (JPM), announced this morning it would lay off 1,600 workers in the San Francisco Bay Area. As part of its efforts to merge with JP Morgan, WaMu is closing operations centers in San Francisco as well as Pleasanton, about an hour to the east.
Yesterday, Bank of New York Mellon (BK) said it would fire 1,800 of its 43,000 employees. The firm blamed a need to cut costs in response to the weakness in the global economy.
As firms across industries hand out pink slips, consumers will further retrench, spurning the superfluous and buying only what they need.
This doesn't bode well for purveyors of the unnecessary, say, for example, Coach (COH). A $800 handbag just isn't that cool if you're holding it in the queue at the unemployment office.
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