Banks 'set for more job losses'
Monday 19 March 2012
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.
- 1 Unseen Charlie and the Chocolate Factory chapter deemed 'too subversive' released
- 3 Joan Rivers: 'Palestinians deserve to be dead'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Israel-Gaza crisis: YouTube footage shows scale of destruction after 50 days of shelling
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Keira Knightley topless: Conservative actress does own take on #Freethenipple campaign for Interview Magazine
Joan Rivers: 'Palestinians deserve to be dead'
Ebola virus: It's ripped through towns – now the deadliest ever outbreak of the virus is heading for Africa's teeming cities
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£40000 - £45000 per annum: Ashdown Group: An established professional services...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
£28 - 32k + Uncapped Commission: Guru Careers: A Business Development Manager ...
£40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...