Europe’s largest and most powerful banks are downsizing again. They have cut their workforce by 3.5 percent last year and the trend seems to continue. Thus, the belief that banks would return to their pre-crisis employment levels seems far off, despite the region’s piecemeal economic recovery. Downsizing is to a large extent result of falling revenues, rising losses, and the need to persuade regulatory authorities that “they are no longer about to fail”. Since the fall of the American bank Lehman Brothers in 2008, large banks have been rather unsuccessful in getting rid of the notorious reputation of “failing banks”. In 2013, European banks conveyed the bad news to many of their employees while in the Eurozone, unemployment rate in banking and financial sectors, including in some of Europe’s largest and most important banks, has kept rising.
Despite the improving financial reports, Europe’s 30 top banks – by market value – fired about 80,000 people last year, as calculated by Reuters based on their year-end statements. Recruitment agencies warn prospective employees that this year might not be different. Especially in countries like Spain or Greece, lay-offs carry on and thus help drive joblessness to staggering 26 percent. Nonetheless, although painful for those who lost their positions in large banks, the ongoing reduction of large banks’ workforces also mean that banking sector is not likely to have as big impact on overall unemployment in case of a future crisis as it was the case in the years following the 2008 crisis.
Last year, the most dramatic downsizing took place in the Spanish bank Bankia, which fired about 23 percent of its employees in order to meet the conditions of its 41 billion euro European rescue kit. The Italian bank Unicredit said that it had cut its staff by about 8,500 employees due to the reductions of a project to outsource IT operations to joint ventures. Belgium’s KBC bank reduced workforce by almost 8,000 employees and cited asset sales as the major reason. In contrast, the Bank of Ireland said that a redundancy program was the main driver behind its 6.3-percent fall in its headcount.
