So far this year, 36,000 job cuts have been announced in the US financial services sector, according to job placement consultancy Challenger, Gray & Christmas Inc. The figure does not include Citi’s announcement on Friday to cut another 9,000 jobs.
Oversized impact
Job losses will surge well beyond the current level, given that the latest data does not account for widely expected cuts among the 14,000 employees at Bear Stearns Cos following the investment bank’s pending takeover by JPMorgan Chase & Co.
The cuts will have an oversized impact on New York City, whose fortunes are closely tied to Wall Street. Everything from Manhattan real estate prices to high-end restaurants and private car services could come under severe pressure, as highly paid investment bankers and traders face job losses.
Bigger bonuses
The securities industry accounts for almost 35 per cent of all salaries and wages in the city. Many bankers and brokers earn a base salary of $200,000 or more, and get even bigger bonuses.
Citigroup’s latest job cuts follow its announcement in January to cut 4,200 jobs. Merrill said it planned to cut an additional 2,900 jobs. In the first quarter, Merrill slashed about 1,100 positions.
Meanwhile, Wachovia—fourth-largest US bank, said this week it plans to eliminate 500 jobs from its corporate and investment banking division. But as the wave of loan losses continues to grow in a slowing US economy and still-tight credit conditions, Wall Street may be in for a rude awakening.
Worst crisis
Global financial institutions have so far sustained well over $200 billion of write-downs and credit-related losses, with the ailing US housing market a central catalyst. Billionaire investor George Soros last week said global losses are likely to top $1 trillion from the subprime mortgage crisis, which he called the “worst financial crisis of our lifetime.”
Job losses in London’s financial district, the City, are likely to hit 40,000 due to fallout from the US subprime mortgage crisis and global credit crunch, analysts at JPMorgan recently projected, doubling their previous estimates.
