European banks are set to receive unprecedented help from governments and regulators, making it more politically sensitive to put people out of work/Bloombergby Bloomberg
Thousands of bankers are set for a reprieve as Morgan Stanley and Citigroup joined European lenders in pledging to preserve jobs amid the widespread impact of the coronavirus.
Citigroup will suspend any planned job cuts, while Morgan Stanley’s Chief Executive Officer James Gorman told employees that the bank will not trim the workforce this year. The New York-based banks are seeking to reassure employees as the pandemic roils markets and raises the prospect of deep losses industrywide.
“While long term we cannot be sure how this will play out, we want to commit to you that there will not be a reduction in force at Morgan Stanley in 2020. Aside from a performance issue or a breach of the code of conduct, your jobs are secure,” said Gorman.
Wells Fargo & Co., the firm with the biggest workforce among US banks, also suspended job cuts. HSBC Holdings is putting on hold as many as 35,000 job cuts while Lloyds Banking Group halted its plans to trim around 780 positions.
Furthermore, Deutsche Bank, Germany’s biggest lender, said that it would pause future job cuts in the middle of a restructuring that aims to cut 18,000 positions by the end of 2022.
In a memo to staff, Deutsche Bank said, ‘To avoid additional emotional distress in the current environment, we will defer new communications of individual restructuring actions to potentially affected employees and the pause will be in place until we see a return to greater stability in the world around us.”
Thomas Gottstein, the Chief Executive Officer of Credit Suisse Group said that the Swiss bank will not announce any layoffs because of the virus, while Commerzbank and Societe Generale may slow the pace of cuts.
European banks are set to receive unprecedented help from governments and regulators, making it more politically sensitive to put people out of work.
However, Italy’s UniCredit is in active talks with worker representatives over its plan to cut 6,000 jobs in Italy and a deal may be in place next month. The bank said that most reductions will come through attrition and early retirements.
“Because of the extraordinary impact of the Covid-19 pandemic, we have decided to pause, for the time being, the vast majority of redundancies associated with this programme where notices have not already been issued,” said Noel Quinn, the CEO of HSBC CEO.
Banks are seeking to show that—contrary to the last financial crisis more than a decade ago—they are now in a position to help countries deal with the unprecedented impact of the virus and its economic impact through ensuring that credit keeps flowing. They are also receiving government aid on loan guarantees and waivers to tap into their capital buffers to help them weather the crisis.
The delayed job cuts put at risk the restructuring efforts underway at many banks at a time when stress in the financial system is rising. Moody’s downgraded the credit outlook for large swathes of Europe’s banking industry as it predicted rising loan-loss provisions coupled with a strong decline in revenue will further erode the sector’s profitability.