Banks 'set for more job losses'

 

Further job losses in the banking sector are on the way, a report said today, after the eurozone debt crisis, compensation costs and higher taxes slashed the combined profits of the UK's five biggest banks.

Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered made combined pre-tax statutory profits of £19.4 billion in 2011, down 13% on the previous year, professional services firm KPMG said in its UK Banks: Performance Benchmarking Report.

The costs associated with the payment protection insurance mis-selling scandal, which amounted to a combined £5.7 billion, and the £1.3 billion bank levy charge have held back bank's financial performance, KPMG said.

The report also found that after aggressive cost cutting and restructuring, including the offloading of non-core businesses, retail banking fared better than investment banking where revenues declined sharply compared with last year.

Bill Michael, UK head of financial services at KPMG, said: "It was a tougher year than many expected and banks will need to continue working hard to turn things around.

"I expect we will see continued cost costing which inevitably means further job losses and business models will be reviewed again to ensure banks are concentrating on their core strengths and the markets with the greatest potential."

The banks with larger exposure to Asian economies were the star performers, KPMG said, reinforcing how the UK and Europe are becoming difficult places for banks to do business.

HSBC, which has 49% of its business based in Asia and Latin America, and Standard Chartered, with 80% of its business in Asia and the Middle East, outperformed the more UK and US-focused banks.

As the amount of capital and liquidity required to write business in the UK becomes higher than in other jurisdictions, it is increasingly difficult for banks without an international focus to achieve the return on equity expected by investors, KPMG said.

Mr Michael said the cost of regulation is "starting to bite" and will not ease off, as work on implementing the Independent Commission on Banking recommendations heats up.

He went on: "All in all, banking in this country requires major changes in business models and remuneration levels for staff to meet the increased capital requirements."

The investment banking sector had "a year to forget", KPMG said, as the eurozone crisis and subdued market activity made life hard.

However, 2012 has also started well and some mild optimism has returned.

PA

Voices
A downbeat David Moyes looks for answers during Manchester United's 2-0 loss at Everton
voicesMoyes' tragedy is one the Deputy PM understands all too well, says Matthew Norman
Arts & Entertainment
Such tweet sorrow: Will's gone digital
arts
News
Matthew Mcnulty and Jessica Brown Findlay in 'Jamaica Inn'
mediaHundreds complain over dialogue levels in period drama
Arts & Entertainment
Rocker of ages: Chuck Berry
musicWhy do musicians play into old age?
VIDEO
Arts & Entertainment
With Jo Joyner in 'Trying Again'
tvHe talks to Alice Jones on swapping politics for pillow talk
News
Jilly's jewels: gardener Alan Titchmarsh
peopleCountry Life magazine's list of 'gallant' public figures throws light on what it means to be a gentleman in the modern world
Sport
John Terry goes down injured in the 70th minute
sportAtletico Madrid 0 Chelsea 0: Blues can finish the job at Stamford Bridge, but injuries to Terry and Cech are a concern for Mourinho
Student
student
News
<b>Rebecca Adlington</b>
<br />This, the first British swimmer to win two
Olympic gold medals in 100 years, is the eversmiling
face of the athletes who will, we're
confident, make us all proud at London 2012
peopleRebecca Adlington on 'nose surgery'
Arts & Entertainment
tvJudge for yourself
Life & Style
tech
Life & Style
Tough call: is the psychological distress Trott is suffering an illness? (Getty)
healthJonathan Trott and the problems of describing mental illness
Life & Style
23 April 2014: Google marks St George's Day with a drawing depicting England's patron saint slaying a fire-breathing dragon
tech
Life & Style
On the dogwalk: a poodle on the runway during a Mulberry show in London
fashionThe duo behind Asos and Achica have launched a new venture offering haute couture to help make furry companions fashionable
News
peopleEmma Appleton says photographer said he would shoot her for magazine if she slept with him
Extras
indybest
News
peopleRevealed: Goop.com's losses - and the pay rises
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

C# .NET WPF GUI Developer (LINQ, MVVM, SQL)

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: C# .NET ...

Application Support, Technical Support, Trading System Tech

£50000 - £60000 per annum + Bonus, Benefits & Training : Harrington Starr: A l...

Business Analyst Energy Trading Implementation (Energy/Oil/Gas)

£500 - £750 per day: Harrington Starr: Harrington Starr are urgently recruitin...

Back-Office Calypso Business Analyst - Europe - 6 Months - £600

£500 - £650 per day: Harrington Starr: Our client is a leading financial servi...

Day In a Page

Brits who migrate to Costa del Sol more unhappy than those who stay at home

It's not always fun in the sun: Moving abroad does not guarantee happiness

Brits who migrate to Costa del Sol more unhappy than those who stay at home
Migrants in Britain a decade on: They came, they worked, they stayed in Lincolnshire

Migrants in Britain a decade on

They came, they worked, they stayed in Lincolnshire
Chris Addison on swapping politics for pillow talk

Chris Addison on swapping politics for pillow talk

The 'Thick of It' favourite thinks the romcom is an 'awful genre'. So why is he happy with a starring role in Sky Living's new Lake District-set series 'Trying Again'?
Why musicians play into their old age

Why musicians play into their old age

Nick Hasted looks at how they are driven by a burning desire to keep on entertaining fans despite risking ridicule
How can you tell a gentleman?

How can you tell a gentleman?

A list of public figures with gallant attributes by Country Life magazine throws a fascinating light on what it means to be a gentleman in the modern world
Pet a porter: posh pet pampering

Pet a porter: posh pet pampering

The duo behind Asos and Achica have launched a new venture offering haute couture to help make furry companions fashionable
A History of the First World War in 100 moments: The mutiny that sent a ripple of fear through the Empire

A History of the First World War in 100 moments

The mutiny that sent a ripple of fear through the Empire
Hot stuff: 10 best kettles

Hot stuff: 10 best kettles

Celebrate St George’s Day with a nice cup of tea. Now you just need to get the water boiled
Sam Wallace: Why Giggs is perfect fit as Manchester United boss... in the longer term

Sam Wallace

Why Ryan Giggs is perfect fit as Manchester United boss... in the longer term
Renaud Lavillenie: The sky's the limit for this pole vaulter's ambitions

Renaud Lavillenie: The sky's the limit for this pole vaulter's ambitions

Having smashed Sergei Bubka's 21-year-old record, the French phenomenon tells Simon Turnbull he can go higher
Through the screen: British Pathé opens its archives

Through the screen

British Pathé opens its archives
The man behind the papier mâché mask

Frank Sidebottom

The man behind the papier mâché mask
Chris Marker: Mystic film-maker with a Midas touch

Mystic film-maker with a Midas touch

Chris Marker retrospective is a revelation
Boston runs again: Thousands take to the streets for marathon as city honours dead and injured of last year's bombing

Boston runs again

Thousands of runners take to the streets as city honours dead of last year
40 years of fostering and still holding the babies (and with no plans to retire)

40 years of fostering and holding the babies

In their seventies and still working as specialist foster parents