"The continuing cost-cutting announcements you've been getting reflect an incredibly difficult revenue environment and that's new "
-Simon Maughan, an analyst at Olivetree Securities Ltd.
Britain's four largest banks are going to eliminate around 189,000 jobs by the end of this year, bringing employment level to a nine-year low due to a dearth of revenue, and moreover, more cuts may follow. Barclays Plc, Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Lloyds Banking Group Plc will employ only 606,000 people worldwide by the end of 2013, down from the peak of 795,000 in 2008 and the least since 2004, when the banks employed 594,000 globally. The measures are a part of cost-cutting plan as all firms are under pressure from investors to reduce fixed costs as Europe's sovereign debt crisis is weighing on income from investment banking as loans rocketed across the region.
Earlier this year, all four banks posted 108 billion pounds of revenue for the previous year, 13% less than in 2008. At the same time costs as a proportion of revenue surged over the period. In addition to firings, asset sales have contributed to the staff reduction. Assets on the balance sheets of the U.K. big four banks have tumbled by 1.7 trillion pounds during the last five years. Total employee costs including salaries, bonuses and pensions for the banks, dropped 1% to about 37 billion pounds last year, but higher than 25 billion pounds in 2004. In the meantime, according to experts, banks will trim its workforce by almost 30% over the next decade as online banking's popularity is growing and this sector requires less staff.
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