Australia Can Expect To Share Pain

The Age

Thursday September 11, 2008

Eric Johnston

AUSTRALIAN banks and stockbroking firms have not yet made wholesale job cuts like those in Wall Street and London but many believe it is just a matter of time before turmoil in global markets is felt among local finance professionals.

As ANZ prepares to axe hundreds of middle-management roles, other banks are looking at their cost bases as the lending market cools. Most at risk are Westpac and St George workers, with a merger agreement signed off this week likely to result in up to 5000 job cuts, according to union estimates.

"If the Westpac merger with StGeorge is approved by the federal Treasurer, a conservative analysis of what that will mean in a job sense is around 5000 (roles)," Finance Sector Union national secretary Leon Carter said yesterday.

Westpac has so far declined to provide details about expected job losses under the merger, but it maintains no customer roles will be affected.

Struggling under the weight of more than $US500 billion ($A616 billion) in write-downs, about 65,000 finance jobs have been lost over the past year. Wall Street has felt the axe most deeply, while lay-offs are also hitting London, with more than 11,000 jobs expected to be cut this year.

Mr Carter believes bank workers will bear the brunt but other finance professionals are at risk.

"Every time there is a little bit of pressure on sales, or if there's some sort of crisis going on in the world, it seems the industry's only playbook is to reduce jobs," Mr Carter said.

Hundreds of investment bankers and advisers have been made redundant in Australia while many more have been advised to run down their annual leave as work dries up.

Babcock & Brown has plans to axe 400 jobs, while Allco Finance Group is expected to slash another 200. Local staff at global investment banks are also feeling cost-cutting among their parents, in response to heavy losses and slowing trading volumes.

US giant Citigroup has so far slashed more than 15,000 positions from its global workforce while Merrill Lynch is planning to cut 4000. More recently, European giant UBS detailed plans to shed 5500 staff as it attempts to repair its balance sheet.

After heavy cuts to their workforce during the 1990s, Australian banks boosted staff numbers in recent years in response to booming credit markets.

With more than 116,000 staff between them, the big five Australian banks have added some 7600 jobs over the past five years - equal to nearly the entire St George workforce.

Mr Carter said the job cuts were a short-term solution for bank problems and this would eventually affect service.

"Less jobs means less people to serve customers and answer the phones," he said.

© 2008 The Age

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