Layoffs Could Be Coming After All

Analysts Predict All Banks Could Be Hit

Keith Griffin

September 2, 2020

Impeding bank layoffs | Image by Gerd Altmann from Pixabay

When the COVID-19 pandemic first struck with its full force in the spring, the country’s major banks said they would not cut staff. Many said it wouldn’t be the proper step to take.

That sentiment appears to be changing, according to reporting by Reuters. The news wire reports banks are now eyeing layoffs as the impact of the short-term crisis lessens and long-term costs emerge.

Compared with April projections, the article said, bank economists and executives expect the U.S. economy to take longer to recover, with high unemployment into 2021 and interest rates staying near zero for the foreseeable future. On top of that, working from home has shown some managers that they need fewer employees to do the same amount of work.

“No question, layoffs (will) come across the board for all the banks,” said Barry Schwartz, chief investment officer at Toronto-based Baskin Wealth Management, which invests in JPMorgan Chase and other large Canadian banks.

Banks have to cut costs because of expected credit issues, as well as low interest rates and regulatory pressure to trim dividends, he said.

Bank staff could shrink by an average of 5-10%, mainly at mid- and lower levels in technology, human resources and finance departments, according to Alan Johnson, head of the compensation consultancy Johnson Associates, Inc.

“We didn’t see a lot of restructuring or layoffs with the banks (earlier in the pandemic). We’re starting to see it now,” said Dennis Baden, partner-in-charge at executive search firm Heidrick & Struggles.

Read more about impending layoffs from Reuters.

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