Banks see massive layoffs
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Faced with difficulties that are expected to linger, large western banks are slashing costs by downsizing their payrolls and increasing the use of artificial intelligence.
Deutsche Bank has said it is laying off 3,500 employees, or 4% of its workforce, to reduce costs by 2.5 billion euros (US$2.7 billion) a year by 2025.
One of the ways the German lender has chosen to cut costs is to promote “simplified workflows and automation,” and so most of the jobs will be shed in the back office. Its pre-tax net profit fell by 14% last year to 4.9 billion euros ($5.3 billion).
Deutsche Bank is the latest of a number of lenders to announce layoffs in recent months. UBS is cutting 3,000 jobs in Switzerland, where it is headquartered.
Citibank, the third largest American bank, last month said it would cut 20,000 jobs in the next two years, equivalent to 10% of its global workforce, to save $2.5 billion in the long term.
January was also when the U.S. financial industry laid off the most workers, 23,238, since Sept. 2018, according to a report by recruitment company Challenger, Gray & Christmas.
The layoff announcements continue in early 2024 amid massive downsizing by the global financial industry.
Major banks around the world axed more than 60,000 jobs in 2023, among the highest in a year since the financial crisis.
Citibank started sacking workers in November 2023.
In the U.K., a number of lenders, including Barclays, Lloyds and Metro Bank, announced staff reduction at around the same time.
Some banks cited increased automation and the use of artificial intelligence as reasons to reduce their payroll.
Lloyds is eliminating certain roles and only hiring data and technology personnel.
The downsizing is also intended to prepare for a more difficult business environment as rising interest rates impact the economy.
Deutsche Bank said it had increased provisions for potential bad debts by 300 million euros to 1.5 billion euros ($1.6 billion) in 2023, which reflected “the continued challenging impact of macro-economic and interest rate conditions.
Investment banks, which had to slash wage costs last year, are expected to continue downsizing.
Questions & Answers
Q.Which banks have announced significant job cuts recently, and how many employees are affected?
Which banks have announced significant job cuts recently, and how many employees are affected?
Deutsche Bank is cutting 3,500 jobs, UBS 3,000, and Citibank plans to reduce its workforce by 20,000. Barclays, Lloyds, and Metro Bank have also announced staff reductions in the UK.
Q.What are the main reasons given by banks for these widespread layoffs?
What are the main reasons given by banks for these widespread layoffs?
Banks cite cost reduction, increased automation, and the use of artificial intelligence as key factors. The downsizing is also intended to prepare for a more difficult business environment due to rising interest rates impacting the economy.
Q.How much cost is Deutsche Bank aiming to save through its layoffs and other measures?
How much cost is Deutsche Bank aiming to save through its layoffs and other measures?
Deutsche Bank aims to reduce costs by 2.5 billion euros (US$2.7 billion) a year by 2025. This includes shedding jobs primarily in the back office through simplified workflows and automation.
Q.What was the scale of job cuts across the global financial industry in 2023?
What was the scale of job cuts across the global financial industry in 2023?
Major banks worldwide axed over 60,000 jobs in 2023, marking one of the highest annual figures since the financial crisis. Citibank began sacking workers in November 2023.