Job losses feared in British financial sector
(Herald Tribune) - Thousands of financial professionals in London are likely to lose their jobs over the next year as a result of the credit crunch, and many of them may face a jobless Christmas, experts say.
There may be 6,500 fewer professionals in the City of London financial hub in 2008 than this year, according to a report by The British Center for Economics and Business Research that was to be released Monday.
Jonathan Said, the center's senior economist, said that about 2,000 City jobs would be slashed by Christmas off a record high of 349,100 registered this month.
"What we are likely to see as we enter 2008 is a reduction of almost one for every two jobs added this year," one of the report's authors, Sarah Bloomfield, said in a statement.
"It will feel worse than it actually is because the City has become used to adding jobs at breakneck speed," she said.
Private equity, mergers and acquisitions, hedge funds and structured finance units will shed the largest number of jobs, the center predicted.
The Swiss bank UBS said last week it would axe 1,500 jobs in its investment bank whose major centers are in London and New York. Credit Suisse also said it would lay off 170 employees in its investment banking unit.
"Clearly, there are going to be more job cuts, especially from the likes of Citi where we can expect the highest," said Shaun Springer, chief executive of the recruitment firm Napier Scott, in London, referring to Citigroup.
Citigroup, the largest U.S. bank by market value, said last Monday it was expecting a fall of about 60 percent in third-quarter earnings.
But recruiters say the City will not suffer layoffs on a scale seen in the previous period of market volatility. According to the report, more than 15,000 financial jobs were lost in London between 2001 and 2002.
"I don't think there is going to be a massive wave of job cuts," Springer said. "The banks did that back in 2001 and 2002, and in 2003 they found themselves desperately short not only of the skilled staff necessary to effect expansion but similarly short of graduate juniors because they didn't take any of those either."
Rather, the number of employees will be reduced steadily over the year, he predicted.
"Five percent get culled every year anyway," Springer said. "Whether they are going to be replaced, I doubt. Whether hiring is going to be as frenetic in 2008 as it was in 2005, '06 and '07, I doubt. There's always natural wastage also, will that be replaced? Perhaps not."
The consequences of the cutbacks will vary.
"There'll be greater talent on the market for a short period of time and that might potentially ease certain organizations' war for talent," said Robert Thesiger , chief operating officer of recruitment firm Imprint.
But, the banking industry risks losing some of its experienced workforce for good. During the last market meltdown, Springer said, many City professionals were forced to move out and never returned.
"They didn't sit kicking their heels waiting for the recruitment market to recover. They went and did something else."