London Bankers Brace for Summer Gloom With Mounting Job Cuts

(Bloomberg) -- A banker who lost his job as part of Nomura Holdings Inc. cuts recalls the camaraderie at the riverside Oyster Shed bar next to the institution’s London headquarters one evening as the room filled with ex-employees.

Japan’s biggest brokerage let about 30 people go that day in April. Summer has arrived in London, but the smiles are likely to remain frozen in the financial community as HSBC Holdings Plc and Deutsche Bank AG join Nomura in implementing thousands of job reductions. In an atmosphere that may be the gloomiest since the financial crisis, some are jumping before they’re pushed.

“It’s one of the worst London job markets I have ever seen outside of a crisis,” said Stephane Rambosson, founder of Vici Advisory, a London-based executive search firm. “I think there’s a real possibility that you could see more than 5,000 jobs lost by the end of the year.”

Cuts are concentrated at non-U.S. investment banks. European lenders, hobbled by weak domestic growth and negative interest rates, have been losing market share for years. Experienced bankers have seen contractions before, but there’s a feeling this time is different. It’s not just shaky markets, trade tensions and Brexit: Automation is making some banking skills obsolete.

The scale of job losses and changes in the industry are forcing bankers to examine all manner of alternatives. The former Nomura staffer described dejected colleagues moving into blockchain, cannabis and even agriculture.

Stressed Out

“People are stressed out and desperately looking for new things, because they know it’s not going to be easy to find a job at another bank,” said Rambosson, himself a former investment banker. “We see people quitting before the cuts come and taking the view that now’s the right time to get out.”

There’s been a steady drop in investment-bank employment since 2013, when U.K. headcount in front-office roles totaled just under 17,000, according to data from Coalition Development Ltd. By 2016, that had dropped to 15,000. By the end of last year, almost 1,500 further jobs had been eliminated. That’s a faster pace than overall industry job losses. Coalition data show a drop of 6,600 front-office roles worldwide since 2013 to 51,800.

“Things will get worse,” said Amrit Shahani, research director at Coalition. “We expect a further 10% reduction in investment bank headcount in the U.K. over the next two years, partly due to Brexit job moves.”

“This year, the U.K. will see double the headcount reduction of previous years, due to lower revenues at investment banks,” said Shahani.

Figures from recruitment consultants Morgan McKinley show the scale of the slowdown in the City job market. In May, 2,369 new financial-services jobs were listed, a drop of 50% year-on-year, even as the number of job seekers held steady at just under 4,000.

Brexit relocations add to the tally. Figures published by the consultancy firm EY this month put planned moves to other EU countries at 7,000, of which almost 1,000 have already happened.

For the 9,000 U.K. staff at Deutsche Bank, the rounds of restructuring may seem endless. On Friday, people familiar with the matter said the bank was preparing to start eliminating up to half the jobs in its global equity division. Even Garth Ritchie -- who runs the investment bank in London -- may soon be replaced as part of a cull that could see as many as 20,000 jobs lost around the world, the people said.

At HSBC, bonuses never soared to Deutsche Bank’s levels, but there was a sense of security at a sprawling institution where some staff worked for decades. Chief Executive Officer John Flint, under pressure to cut costs, is set to change that. At least 500 jobs could go within global banking and markets, people familiar with the matter said in May, with London likely to be in the front line of the cull.

Nomura announced $1 billion in cost cuts at its wholesale division in April. The London part of that business was designed to service hedge funds that do a lot of trading. They’re not doing much at all, given persistently low volatility, and many have shut their doors.

Morale at Nomura remains low, said the banker who watched his former colleagues arrive at the bar one by one. Many of those still on the payroll are looking, the banker said, though with the London job market so weak, few have jumped ship. He requested anonymity to discuss the circumstances of his departure.

Stifel Financial Corp., the St. Louis-based firm that expanded in the U.K. on the eve of Brexit, is shedding about a dozen traders and bankers in London, Bloomberg reported Tuesday. The company, which employs about 300 in an office close to St. Paul’s Cathedral, is now pushing into continental Europe through the acquisition of MainFirst Holding AG’s brokerage operations.

Automated Bankers

Ultimately, bankers face the rise of the robots. Big banks have increased their investment in IT and collectively are spending tens of billions of dollars a year across their businesses to automate jobs currently done by humans.

UBS Group AG recently studied 49 major banks, including Barclays Plc, Deutsche Bank and HSBC, and found they had collective software and IT assets of $70 billion in 2018, more than double their value back in 2010.

“If you’re someone whose job is being automated then it’s tough -- and it’s hard to know where they will go if these jobs are being automated everywhere,” said James Murray, a director at recruitment firm Robert Walters Plc.

“The people that understand trading models and can work with the automation guys are very much in demand.”

To contact the reporters on this story: Harry Wilson in London at hwilson57@bloomberg.net;Viren Vaghela in London at vvaghela1@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Keith Campbell

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