| 10.01,12. 02:39 AM |
Banks plan staff purge
January 10, 2012
THE nation's biggest banks are tipped to welcome in the new year by slashing thousands of jobs across the board, with soaring funding costs causing lenders to introduce drastic programs aimed at bolstering their bottom line.
With staff costs accounting for nearly 60 per cent of the $32 billion spent by the big banks each year, they hope the measures will ease pressures amid what analysts have called the slowest rate of mortgage growth since WWII.
Westpac has been the most open about job cuts, with chief executive Gail Kelly saying late last year that staff numbers were likely to fall.
While the bank said it had no firm plan to cut staff - a position also held by its rivals - analysts predicted nearly 1600 jobs would be stripped from the business this year.
Commonwealth has launched a program codenamed "Project 35", hoping to achieve a 35 per cent cost-to-income ratio for its retail banking unit by 2013. Cost-to-income ratios show a bank's costs and expenses in relation to overall gross income, with the lower the ratio the better.
One analyst, who declined to be named, said the only way the Commonwealth could achieve its target was by re-evaluating staff costs.
Sources at ANZ suggested the bank had begun work on a new redundancy program, just four years after 1000 staff lost their jobs under the "One ANZ" restructure in 2008.
Fat Prophets senior analyst Greg Fraser said yesterday it would be a tough year for those in the banking sector.
"All the banks are looking at low single-digit credit growth," he said. "They need to find another way to boost earnings growth and there are strong signals that further cost cutting in labour costs will be the source of some profit growth this year."
The speculation comes despite the banks collectively posting $24.2 billion in profits last financial year, an increase of 11.5 per cent on 2010.
Finance Sector Union national secretary Leon Carter said it would be unacceptable for the major banks to shed workers to lower costs: "In our experience whenever they mention the word costs all they do is focus on staff costs."
He said he would be urgently seeking comment from the major banks to categorically state no jobs would be slashed.
"There is an added urgency this year because, unfortunately, despite the capacity to do so, none of them have come out and said 'we won't be sacking Australians in 2012'," Mr Carter said.
"Instead, what they let go is endless speculation that workers are going to lose their jobs."