Job Cuts At Investment Banks: What Made Almost 30,000 People Lose Their Positions?

Worldwide investment banks are reducing the number of positions as falling loan fees, frail trading turnover and massive robotization make a ruthless summer for the sphere. What causes people to lose their positions? Reasons vary – let’s clear them out.

There’s too much workforce

About 30,000 people were fired since April 2019 by a few major international banks with Deutsche bank representing the greater part of the specialists, while exchanging platforms were also hit hard.

In New York City, occupations in securities & commodities trading decreased by 2% in June from the previous year. About 2,800 positions were lost.

Finance institutions are feeling the pressure from financial specialists to reduce expenses and secure profits. Since long haul US interest rates started to decrease in November, the KBW record of US bank offers has fallen 5%, while the S&P 500 has ascended by 6%. The Stoxx index of European banks has shredded by 16% since November – it’s the lowest low in three years.
While the reasons given differ from one company to another, there are signs that more profound patterns, for example, the growing debt paying a negative interest rate, are making the sphere to shrink.

Why did it happen?

There’s a multitude of reasons for firing, and the changing economic model and interest rates are the major underlying issues. As analysts note, it’s hard to stay afloat with zero or negative interest rates. Considering the increasing debt, the load on companies adds up.

Thus, to win the battle, banks should have volume, systems, and computer power. But not necessarily people – it’s not the largest value anymore.

Other reasons for massive job loss:

  • Automated trading and exchanging, passive investment procedures and combination of volumes by the greatest players have taken most benefit from exchanging of stocks and numerous sorts of futures. In 2018, the absolute income of the best dozen worldwide institutions from fixed pay, cash, and products exchanging dropped to 2006 levels, according to Coalition financial research firm.
  • Business automation tools and platforms are also playing a significant role. Why hire people when machines are doing the same work faster and more efficiently?
  • Banks are additionally preparing for the alleged Basel IV rules, which will change capital requirements that will produce results in 2022. The expanded capital required will make exchanging less beneficial for some.

All in all, business automation penetrated into every sphere. Combined with increasing requirements from governmental bodies, all that contributed to forced job cuts. So if you want to continue your career path as a banking specialist, you should work hard to stay a truly invaluable professional.