LONDON (SHARECAST) - A plunge in profits across the financial sector will have cost the City “at least 12,000 jobs” during the past three months, the CBI warned Monday.
The axe had already fallen on 8,000 positions in the quarter to 30 June, according to the CBI's quarterly survey of the finance industry with PricewaterhouseCoopers.
“One year after the credit crunch first took hold, business volumes and profitability in the financial sector have taken their hardest hammering yet,” said deputy director-general of the CBI John Cridland, .
“Firms have become more fearful about the extent and length of the credit crunch and they are now looking to cut more jobs and scale back investment.”
Of the businesses surveyed, 44% expect to have cut staff during the third quarter as 49% said profits fell in the previous three months. Worse is predicted.
“As the banking sector faces up to growing credit impairments, slowing revenues and higher funding costs, the sector remains more depressed than at any other time since 1998 and has given its most downbeat prediction for profitability in nineteen years,” said Andrew Gray, UK banking advisory leader, PricewaterhouseCoopers.
The survey was carried out between 20 August and 3 September, before the collapse of US investment bank Lehman Brothers, the $50bn rescue of Merrill Lynch by Bank of America, and the US government’s $700bn financial bailout plan.
It will also have missed Lloyds TSB’s £12bn bid for rival HBOS, which could see as many as 40,000 jobs disappear, and Santander’s purchase of Bradford & Bingley’s branch network.
The Spanish banking giant, which already owns Abbey National and Alliance & Leicester, will transfer B&B's 197 retail branches and 141 agencies to Abbey.
Last week, HSBC said around 500 jobs will go at its Canary Wharf headquarters as part of the global banking goliath’s plan to cull 1,100 workers worldwide.
That followed Bradford & Bingley’s decision to dump 370 employees, mainly at its processing centre at Borehamwood, Hertfordshire.
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