Worst may be over for global banking job losses, analysts say

Layoffs in the banking industry are set to slow this year after about 62,000 people in the sector lost jobs in 2023, the worst tally of employment losses since the global financial crisis.

The new year has started with one global banking giant announcing a job cut of about a third of last year’s total.

Citigroup, the third-largest lender in the US, on Friday announced plans to cut 20,000 jobs within the next two years, raising questions about the health of the banking sector in the world’s biggest economy.

However, analysts say despite mounting pressure on income amid slowing economic momentum, most global banks will not have to execute the same scale of employment cuts as last year.

“We think the worst is over when it comes to cutting jobs. Most of the job efficiency problems have been tackled and this year we expect [better] performance in the results from these banks,” Naeem Aslam, chief investment officer at Zaye Capital Markets, said.

New York-based Citi on Friday reported that it had swung to a $1.8 billion loss in the fourth quarter and that the planned cuts are part of its strategy to optimise costs.

The job cuts at Citi are part of its multiyear efforts to cut bureaucracy, increase profits and boost a stock that has lagged peers.

The bank plans to reduce its global workforce of 239,000 by about 8 per cent through 2026, chief financial officer Mark Mason told reporters.

Citi will also no longer count 40,000 jobs on its payroll when it spins off and lists its Mexican consumer unit Banamex in an initial public offering. It eventually aims to reach a staffing level of 180,000 employees globally, Reuters cited Mr Mason as saying.

Though Citi’s announcement of massive job cuts “raises questions about whether it is a continuation of the previous year’s trend”, it is probably not the case, Vijay Valecha, chief investment officer at Century Financial, said.

Twenty of the world’s biggest banks cut at least 61,905 jobs in 2023, according to calculations by the Financial Times. That compares with more than 140,000 jobs slashed by the same lenders during the global financial crisis of 2007-2008.

The biggest contributor to that figure last year was Swiss bank UBS. It let go of about 13,000 employees after it brought Credit Suisse into its fold following the acquisition deal in June to save its liquidity-starved fellow Swiss lender from collapse.