In July, as financial sector layoffs mounted, a top executive search firm estimated as many as 80,000 jobs might go in this coming round of financial layoffs.
“This is kind of like the beginning of a tsunami,” said Richard Stein of Caldwell Partners. “You don’t get it in one go — it comes in sort of short shock waves.”
Well, those shock waves have kept coming — with today’s brutal announcement from HSBC (NYSE:HBC) that by 2013 it will cut an additional 25,000 jobs on top of 5,000 posts already being eliminated.
Financial sector layoffs have reached a fever pitch as bank earnings have rolled out. Just a few of the announcements include:
- In June, Goldman Sachs (NYSE:GS) warned that 230 jobs could be on the chopping block. After poor earnings in July, it upped that number to 1,000 jobs.
- Barclays (NYSE:BCS) announced it will lay off “several hundred” workers soon in addition to the 600 that already were laid off from Barclays Capital earlier in the year.
- UBS (NYSE:UBS) has been rumored to be considering layoffs of up to 5,000 people in July.
- Credit Suisse (NYSE:CS) is planning to axe about 2,000 staffers, mostly in Europe, despite weathering the financial crisis better than euro zone peers.
That’s a staggering total, and it doesn’t include layoffs we haven’t had confirmed or had leaked to the press yet. And, if you haven’t noticed, most of those big banks are abroad.
So the nagging question is not whether Wall Street will take a similar hit, but when.
For instance, struggling financial stock Bank of America (NYSE:BAC) surely cannot sustain its work force of nearly 290,000 for much longer. Revenue is stagnant, the company just posted an ugly loss of 90 cents per share in July, and the stock is trading under $10 pre-market and is approaching a new 52-week low.
What’s more, consolidation has been the name of the game for the better part of two years, and that creates redundancies. Even the healthier banks like First Niagara (NASDAQ:FNFG) will see jobs vanish because of recent acquisitions — including a move by FNFG this week to buy 195 retail branches from HSBC, on top of previous buyouts of National City Bank and Harleysville National. First Niagara has made these moves to achieve reach and economies of scale, both of which come with the benefit of streamlined operations.
The icing on the cake is many experts think the financial sector didn’t cut deep enough in 2009 and has resumed hiring too quickly. As Wall Street Journal columnist David Weidner noted a few weeks ago, “The securities industry still employs about 800,000 people nationwide, according to the Securities Industry and Financial Markets Association. That is only 7.8% fewer than the all-time high, and roughly the same as in 2006, when Bear Stearns Cos. and Lehman Brothers Holdings Inc. still roamed the earth.” In short, the financial sector is staffed much like it was before the crash.
If recent headlines are any indication, the financial sector is looking to change that fact in a hurry.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he held a long position in Bank of America stock. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.