Major Banks Pause Job Cuts Amid Coronavirus-Related Mayhem

Although banks across the globe are hit hard by coronavirus-related slowdown, they are trying to alleviate the hardships of employees. Several global banks have paused job cuts and are reassuring the workforce privately or through public statements regarding the same.

Details

In a memo sent to all its employees, Morgan Stanley’s (NYSE:MS) CEO, James Gorman, said “While long term we can't be sure how this will play out, we want to commit to you that there will not be a reduction in force at Morgan Stanley in 2020.”

Other Wall Street biggies, Citigroup (NYSE:C) , Goldman Sachs (NYSE:GS) and Well Fargo (NYSE:C) have also reassured their employees that there will be no planned job reductions. In a statement, Wells Fargo’s spokesperson commented, “We have paused initiating new displacements.”

However, there is no such update from the two biggest U.S. banks - JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) .

Major foreign banks like HSBC Holdings (LON:HSBA), Deutsche Bank (NYSE:DB) , Credit Suisse (SIX:CSGN) Group AG and Lloyds Banking Group Plc (LON:LLOY) are taking similar steps. In a memo sent to staff, HSBC’s CEO Noel Quinn stated, “Because of the extraordinary impact of the COVID-19 pandemic, we have decided to pause, for the time being, the vast majority of redundancies associated with this programme where notices have not already been issued.” In February, the company had announced plans to slash 35,000 jobs, with an aim of restructuring businesses and lowering annual costs by $4.5 billion.

Likewise, Deutsche Bank had announced intention of eliminating nearly 18,000 jobs by 2022-end. However, the bank will refrain from doing so due to the coronavirus outbreak. Also, Lloyds has paused the elimination of 780 job positions.

However, a few other banks like Commerzbank AG (DE:CBKG), Societe Generale (PA:SOGN) SA, UniCredit SpA and Royal Bank of Scotland Group (LON:RBS) Plc (NYSE:RBS) are likely to stick to their planned business streamlining initiatives.

Why Job Cuts Have Been Paused?

Banks are known for their fire and hire policy according to business needs.

However, this time, no one has any idea how long the impact of coronavirus-related slowdown will continue. Further, unlike 2008 financial crisis, banks are financially healthy with sufficient liquidity. So, banks are of opinion that once the crisis is over, they will be able to bounce back faster and this will require enough staff members to continue providing banking services.

Moreover, a sudden spurt in business activities is expected once people go back to normal life after lockdowns are lifted and the banks want to be fully ready to meet clients’ demands. Also, in case the pandemic results in staff shortage due to employees falling sick or choosing to stay at homes, then the banks should have enough backup workforces to continue normal business activities.

Conclusion

With banks receiving help from central banks and local administrations in maintaining liquidity in the financial system, job cuts will make banks appear insensitive amid the current situation.

Banks are taking several measures like deferring loan repayments, delaying payment of interests and waiving late fees, with an aim of alleviating hardships of retail and small businesses.

Also, banks have suspended share repurchases and plan to use freed-up capital for lending activities. They are even under pressure to slash dividend payouts, though such announcements haven’t been made yet.

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JPMorgan Chase & Co. (JPM): Free Stock Analysis Report

Bank of America Corporation (BAC): Free Stock Analysis Report

Citigroup Inc. (C): Free Stock Analysis Report

Morgan Stanley (MS): Free Stock Analysis Report

Royal Bank Scotland PLC (The) (RBS): Free Stock Analysis Report

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Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report

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