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Major Australian Banks Likely To Cut Thousands Of Jobs
Australia’s biggest lenders are likely to cut thousands of jobs nationally as they seek to consolidate record earnings from last year.
Amidst a backdrop of soaring funding costs and slower growth in mortgage lending, ANZ, Westpac and CBA have devised plans to reduce expenses according to the Daily Telegraph.
CBA’s plan, with an intriguing code name “Project 35”, seeks to achieve a cost to income ratio at its retail banking division of 35 per cent by next year. According to banking analysts reducing the ratio to that level from its current rate of 38.7, will mean a loss of at least 600 jobs.
In August last year, CBA announced a record $6.4 billion in profits for the year. Rival NAB delivered a record $5.5 billion, whilst Westpac also produced a record $7 billion. ANZ also reported a record profit of $5.36 billion.
Gail Kelly, chief executive of Westpac in the past has said it is likely that employee numbers are probably going to “trend downwards” whilst admitting that the lender currently has no firm plans to cut staff, many analysts are of the opinion that Westpac will likely cut as many as 1600 jobs over the course of the year.
In 2008 rival ANZ restructured its banking unit, with the axing of 1000 jobs, with unnamed sources at the lender saying that a similar restructuring is likely, with the loss of a further 1000 jobs.
Leon Carter, the national secretary for the Finance Sector Union said it would not be acceptable for the major lenders to implement cost cutting programs designed to lower costs by firing staff.
“In our experience, whenever they mention the word `costs’ all they do is focus on the staff costs,” Mr. Carter said.
Mr. Carter says he intends to seek reassurances from the major lenders that no jobs will be cut.
According to banking analysts, wages represent as much as 60 per cent of the annual $32 billion in costs incurred by the major lenders every year. Currently Australia has experienced the slowest rate of growth in mortgage lending since the Second World War.
Hopes are running high that the central bank will engage in another round of easing in interest rates next month.
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