Banks eye layoffs as short-term crisis ends, long-term costs emerge – Reuters

NEW YORK (Reuters) – At the height of the coronavirus pandemic last spring, the heads of U.S. banks including Morgan Stanley (MS.N), Bank of America Corp (BAC.N) and others pledged not to cut any jobs in 2020 because it was the wrong thing to do. FILE PHOTO: A homeless man sleeps in a closed Chase…

Banks eye layoffs as short-term crisis ends, long-term costs emerge – Reuters

NEW YORK (Reuters) – At the height of the coronavirus pandemic last spring, the heads of U.S. banks including Morgan Stanley (MS.N), Bank of America Corp (BAC.N) and others pledged not to cut any jobs in 2020 because it was the wrong thing to do. FILE PHOTO: A homeless man sleeps in a closed Chase bank branch on a nearly deserted Wall Street in the financial district in lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar/File PhotoHowever, as executives prepare for an extended recession and loan losses that come with it, layoffs are back on the table, said consultants, industry insiders and compensation analysts. Compared with April projections, bank economists and executives expect the U.S. economy to take longer to recover, with high unemployment into 2021 and interest rates staying near zero for the foreseeable future. On top of that, working from home has shown some managers that they need fewer employees to do the same amount of work. “No question, layoffs (will) come across the board for all the banks,” said Barry Schwartz, chief investment officer at Toronto-based Baskin Wealth Management, which invests in JPMorgan Chase and other large Canadian banks. Banks have to cut costs because of expected credit issues, as well as low interest rates and regulatory pressure to trim dividends, he said. Bank staff could shrink by an average of 5-10%, mainly at mid- and lower levels in technology, human resources and finance departments, according to Alan Johnson, head of the compensation consultancy Johnson Associates,
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