Year of Pain: Low credit growth and high funding costs force banks to scrap 7000 jobs; Sourcing cheaper staff overseas is Australia's new growth industry
Tweet Topic Started: 14 Jan 2012, 09:03 AM (3,458 Views)
Last year we saw the primary effects of low credit growth with reduced demand and falling/stagnant house prices. This year we will start to see the secondary effects of rising unemployment and vendor capitulation.
I'm not hearing so much these days about owners not needing to sell but alot of stories about people snaring "bargains". Let's see how long vendors can hold out when they lose their job.
The big banks are likely to scrap 7000 jobs over the next two years as lenders cut costs that account for 58 per cent of expenses to offset the weakest credit growth since World War II, according to UBS. Lenders will reduce total staff numbers by 3.9 per cent to 172,000 from 179,000, UBS analysts said in a note to clients. Those figures don’t include ANZ's Asian staff, they said.
The focus on employment costs at banks mirror the challenge faced around the world by lenders battling slower revenue growth amid weak household and business confidence. ANZ is preparing to cut as many as 900 jobs in coming months, the union that represents bank workers said last week.
‘‘We expect the banks to be heavily focused on their cost bases,’’ the UBS analysts said. ‘‘Solid reductions in headcount and discretionary costs are anticipated as banks react to the lower growth environment.’’
UBS continues ‘‘to be cautious on the outlook for credit growth’’ and doesn’t expect a ‘‘significant pickup in the housing market’’, the note said.
I know of a couple of posters on other forums who are both Bank staff and Property Investors. Let this be a lesson to those who produce nothing but debt.
What interests me the most is that banks would not be sacking staff if they expected credit growth to rebound. In effect they are resigning themselves to the fact credit growth will remain near ww2 lows. No bulls will respond because they know its odds on and they have 0.
ANZ's global website had 55 jobs advertised at its new Manila operation yesterday. They ranged from a new head of human resources to credit-risk officers and business analysts. Almost all required a high level of university education, two years of similar experience and fluent written English. A further 10 jobs are available with the bank in Indonesia. But not a single job is advertised in Australia. It's a similar story across the financial services sector.
When you run the numbers, it's easy to see why banks are transferring jobs overseas. An Australian-based credit risk officer with National Australia Bank told The Saturday Age a ''reasonable wage'' was $60,000 a year, ranging up to $80,000 for someone with more experience.
In Manila, jobs for overseas banks are advertised in local papers, working out of one of the many sparkling new facilities that have been built near the capital. Jobs for credit-risk officers working for overseas banks - none of them identified - are being advertised at 20,000-30,000 Philippine pesos a month. That is equivalent to $5000-$7800 a year. For this a university education and a minimum of four years of similar experience are needed. The jobs websites and newspapers of Manila are filled with ads for such jobs.
FIFTEEN years ago Gurgaon was little more than a highway stop on the outskirts of the Indian capital, New Delhi. Now it has dozens of shopping malls, seven golf courses and a forest of office blocks. Gurgaon has been built on India's internet-age outsourcing sector. The city's heady, unruly rise is symbolic of the rapid growth of the industry. The country's biggest outsourcing firms are housed in Gurgaon, many in futuristic-looking buildings. They are easy to pick because of the huge satellite dishes on the roof.
The staff service clients around the world, doing things as diverse as collecting debts from credit-card defaulters, managing drug research data for pharmaceutical companies or analysing companies listed on Wall Street.
At the Gurgaon office of India's biggest outsourcing company, Genpact, the cafeteria is filled with smartly dressed young people with iPhones and security tags who talk of working the ''London'' or ''Sydney'' shift. Their well-appointed work stations would not be out of place in Sydney or Melbourne. But one thing is very different: the cost of their labour. Salaries for an English-speaking, university-educated worker at Gurgaon's outsourcing companies start at about 20,000 rupees a month - less than $5000 a year. And they have counterparts in many low-income countries across Asia, Africa and South America.
I know of a couple of posters on other forums who are both Bank staff and Property Investors. Let this be a lesson to those who produce nothing but debt.
What interests me the most is that banks would not be sacking staff if they expected credit growth to rebound. In effect they are resigning themselves to the fact credit growth will remain near ww2 lows. No bulls will respond because they know its odds on and they have 0.
You may have heard, the Aussie banks are making record profits. They don't 'need' to sack anyone. They are only doing to reduce costs further and make new record profits this year.
Also, those Westpac IT employees that were made redundant last week were rehired the next day by Westpac.
PS. Credit growth is still occurring.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
You may have heard, the Aussie banks are making record profits. They don't 'need' to sack anyone. They are only doing to reduce costs further and make new record profits this year.
Also, those Westpac IT employees that were made redundant last week were rehired the next day by Westpac.
PS. Credit growth is still occurring.
I didn't know westpac reemployed those sacked staff...
You may have heard, the Aussie banks are making record profits. They don't 'need' to sack anyone. They are only doing to reduce costs further and make new record profits this year.
Also, those Westpac IT employees that were made redundant last week were rehired the next day by Westpac.
PS. Credit growth is still occurring.
I didn't know westpac reemployed those sacked staff...
Barns - why would you pay someone a redundancy and then re hire them? Doesn't make sense to me. They may have given some of them a bonus or contract to train the new staff.
The point is - with the Aussie exchange rate as it is - it is much much cheaper to hire staff overseas. This will happen more and more. But it is very short sighted, and will result in short term growth rather than long term strategy.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
Yes - but at a severely diminished rate. There is surely a major difference in the profitability of lenders when overall credit growth is travelling at around 3.5% pa as opposed to around 15% pa before the GFC.
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