As crisis drags on; layoffs mount globally

Credit Suisse and Nomura Holdings announced big job cuts on Thursday, further evidence the global financial crisis is unrelenting for an industry battered by heavy losses and weak markets.

The 5,300 layoffs by the Swiss bank and a further 1,000 in London by Japan’s biggest broker are the latest in the global financial sector which has now seen over 150,000 jobs culled since September when Lehman Brothers filed for bankruptcy.

Of these, more than 50,000 were at Citigroup, which has made more writedowns than any other bank in the world during the crisis.

While the axe had been falling for months in the industry, Lehman’s fall sparked carnage in financial markets and reshaped the industry landscape, resulting in job losses from New York to Singapore to Mumbai. “I don’t think people really know what’s next. It depends on sentiment, which will in turn drive credit markets, which in turn will weigh on banks or not,” said a London-based equities trader.

From the United States to Asian export giant Japan to European powerhouse Germany, the world’s top economies are now in recession as the global crisis deepens.

They are not the only ones with Singapore, New Zealand and Hong Kong also joining in. The losses at banks are increasing. Credit Suisse said on Thursday it made a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.

It has already cut 1,800 jobs this year and said this week it would cut 650 investment banking jobs in Britain. “Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction,” the bank said.

Credit Suisse’s shares jumped 8% in European trade in a broader market up 1.6%.
In Asia, Nomura, Japan’s biggest brokerage, said the decision to cut as much as 22% of its London staff followed an internal review after the purchase of the Asian, European and Middle Eastern assets of Lehman Brothers.

Nomura had said the purchase of parts of Lehman Brothers would help the Japanese brokerage achieve its profit target despite poor financial market conditions. “This is a natural move,” said Azuma Ohno, a brokerage analyst at Credit Suisse Securities in Japan.

“Once Nomura bought Lehman, it cannot continue Japanese-style life-time employment. It needs to be flexible in costs to be profitable.”Australia’s top investment bank, Macquarie Group, is cutting 10 to 15% of its jobs in Asia, two sources said last week.

Banks are axing jobs across Asia and even in countries such as India, where investment bankers were snapped up feverishly in the last few years in anticipation of strong initial public offerings and M&A markets. “The layoffs will come in phases and will stretch into 2009,” said Singapore-based Will Tan of Webbe International, an executive search firm specializing in the financial sector.

The job cuts from Nomura and Credit Suisse came a few hours after a report of layoffs at Bank of America. Bank of America CEO Kenneth Lewis said the bank is in the “final stage of our analysis” for planned job cuts following its purchase of Merrill Lynch, the Charlotte observer said on its website on Wednesday. Layoffs have also gathered pace at fund management firms.

State Street, one of the world’s biggest institutional money managers, said on Wednesday it plans to lay off as many as 1,800 people, or 6% of its staff, in the first three months of 2009. Private equity firm Carlyle Group is cutting about 100 jobs — around 10% of its staff — a source familiar with the situation said. The reductions are the first major cuts made by a large US private equity firm since the global economic crisis hit.

Middle market investment bank Jefferies Group will slash nearly 15% of its employees worldwide and close offices in Dubai, Singapore and Tokyo as it contends with heavy losses for 2008.

Source: Reuters