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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
Topic Started: 14 Jan 2012, 09:03 AM (3,459 Views)
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Westpac cuts jobs as mortgage demand falls and won’t commit to passing on rate cuts

By Larry Schlesinger
Friday, 03 February 2012

Westpac says expectations of lower mortgage growth and the need to remove duplicate back-office roles as part of phase two of its post-St George merger are the reasons for its decision to axe about 560 jobs.

Peter Hanlon, Westpac financial services executive, says the job cuts will mostly be in mortgage processing and head office roles.

“We don’t see in the near to medium term a pick-up in housing or business credit growth,” he said following the announcement.

Hanlon estimates about one-third of those axed will be transferred to other roles, with up to 400 staff made redundant.

The move to cut jobs has been slammed by the Finance Sector Union, which has urged the government to intervene and stop the cuts.

“Westpac can afford to keep every single one of these workers in their jobs and continue to make a multi-billion-dollar profit,” says FSU secretary Leon Carter.

In an interview on ABC radio today, Westpac CEO Gail Kelly refused to rule out further job cuts and would also not say how much of an expected February rate cut the bank would pass on to borrowers.

Her comments on higher funding costs suggest borrowers should brace themselves for the banking not matching any RBA move.

“These are complex matters and we won’t foreshadow and decision ahead of the time,” Kelly said, adding that the linkage between interest rate decisions and the cash rate had weakened.

However, she said the actions of the European Central Bank (ECB) in December that injected significant liquidity into the banking system had taken “the cataclysmic risk of the eurozone collapsing off the table”.

“[The actions of the ECB] have underpinned the banking system and the eurozone overall,” Kelly said.

However, she said hopes voiced a year ago that funding costs would be on the decline and returning to more normal levels had not happened,

“The troubles in the Eurozone means they have remained elevated. If anything they are higher now then they were at any times during the entirety of GFC and its more expensive to raise deposits,” she said.

Kelly said the bank had to safeguard net interest margins on its loans or else face the risk of potentially reducing the level of credit provided and “potentially landing up in a credit crunch”.

“We’re into a very much more slowing growth world – you only have to look at Europe to see that we are into several more years of much slower growth.

“This changed world brings with it higher levels of funding costs and changing consumer patterns and as banks we do need to adjust.”

She also defended the jobs cuts and said they were part of plans to simplify banking systems.

“This is the largest announcement we are likely to make this year …you can expect us to have a lower number of employees at the end of the year than we had at the beginning,” she said.

Kelly pointed out the bank was adding new roles at the same time as sacking staff, adding about 200 staff to its Bank of Melbourne operations, 50 new roles in financial advice, 50 new roles in institutional banking and has recently recruited 83 graduates.

The Property Council of Australian office report forecasts 7,000 financial services jobs to go in 2012.

ANZ axed about 130 positions earlier this month while the Royal Bank of Scotland plans to cut 170 jobs in Australia.

Read more: http://www.propertyobserver.com.au/mortgages/westpac-cuts-jobs-as-mortgage-demand-falls-and-wont-commit-to-passing-on-rate-cuts
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Sad about the jobs, but bankers won big in the boom

February 5, 2012

THERE is no solace for bank workers losing jobs in the knowledge that their redundancies will make a considerable contribution towards maintaining or increasing the bonuses paid to their bosses, especially those at the very top. If profit can't be increased by riding a credit growth bandwagon, it will be done by cutting costs. Thanks for coming.

There's also little comfort in knowing that the sacked workers' plight is just part of a much broader international phenomenon. It wasn't just Australia that saw the banking industry soar to incredible heights over the past few decades and is now facing up to an across-the-board tightening - except for those pay packets at the top, of course.

But while the pain and stress of individuals losing their jobs is real, there's no point in being alarmist about the overall story of outsourcing and downsizing. It happens in cycles in all industries and, heaven knows, various bankers have played key roles in enforcing it elsewhere. Some of those being sacked from banks may have cracked a downsizing whip over all sorts of enterprises when the global financial crisis was young - the karma bus comes round occasionally - but it looks like many more will be in back-office positions most suited to outsourcing.

We have a tendency to make the worst out of redundancy stories. It's an easy and appealing thing for journalists to do and not just for cynical reasons. Some of us are human and capable of empathy, never mind that our own industry has been and remains prone to sackings, downsizing and outsourcing as well. What we tend to ignore or downplay are the ''good news'' stories of job creation that provide some economic balance. The labour market was basically flat all of last year, as has been previously discussed here, but what that means is that for every job that was lost, another was being created. And it could indeed be worse - you could be just about anywhere else in the developed world. Australian banking remains wonderfully strong as it adjusts to slower growth, not to outright contraction.

Read more: http://www.smh.com.au/business/sad-about-the-jobs-but-bankers-won-big-in-the-boom-20120204-1qysk.html#ixzz1lSLtUQo1
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NAB posts 7.7% quarterly profit gain

February 7, 2012 - 8:56AM

National Australia Bank has posted a 7.7 per cent increase in first-quarter profit and may ditch its troubled UK operations after a review. While the profit was slightly below market expectations, the increase will probably add to pressure for the bank to pass on to borrowers a cut in interest rates if the Reserve Bank makes such a move later today.

NAB reported a first-quarter cash profit of $1.4 billion, up from $1.3 billion a year ago, slightly below an average forecast of $1.45 billion from five analysts surveyed by Reuters. In December, NAB forecast a challenging 2012 with business and consumer sentiment subdued.

Last year, Australia's big four banks together made a record $25 billion in profits but credit growth has fallen to the lowest level since the 1970s as households increase savings and corporates pay down debt, forcing banks to focus on cost controls.

Read more: http://www.smh.com.au/business/nab-posts-77-quarterly-profit-gain-20120207-1r2fa.html#ixzz1ldsOmkY2
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Weekend work change put on the backburner

Eric Johnston, Chris Zappone
May 8, 2012

BANKS have quietly shelved their bid to extend the definition of ordinary working hours to include Saturday afternoons and Sundays, in a sign they have a limited appetite for further workplace reforms while many are shedding jobs.

Commonwealth Bank become the latest to detail job cuts yesterday. It announced it would axe 100 mortgage-related roles as it deals with the slowdown in demand for loans affecting all banks.

ANZ, CBA and Westpac applied to Fair Work Australia in March to amend an award covering banks to allow weekend work to be considered part of the ordinary working week. They said it would improve the flexibility of staffing branches and call centres.

But unions had feared it was part of a broader attempt by banks to abolish penalty rates for weekend work. Banks pay staff time and a half for Saturday afternoons and double time for Sundays.

Michael Tamvakologos, a partner for the law firm Ashurt Australia, which represent the banks, told Fair Work Australia yesterday the banks ''do not wish to press'' the application surrounding the extension of the working hours. A Fair Work Australia directions hearing had been scheduled for tomorrow, but may now be cancelled.

While the more controversial aspects of the award have been scrapped, banks will still press ahead with changes to annual leave, including asking staff to draw down on excessive leave balances.

Read more: http://www.smh.com.au/business/weekend-work-change-put-on-the-backburner-20120507-1y94q.html#ixzz1uEzLupKu
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genX
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audas
29 Jan 2012, 12:48 PM
Will be moving all accounts to Commonwealth Bank as of this week - they are the only major bank not off shoring jobs.


Not true. Hundreds of jobs went to Tata Consultancy Services. ANZ is probably the worst though. They have moved a huge amount of work offshore.
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peter fraser
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genX
8 May 2012, 11:42 PM
audas
29 Jan 2012, 12:48 PM
Will be moving all accounts to Commonwealth Bank as of this week - they are the only major bank not off shoring jobs.


Not true. Hundreds of jobs went to Tata Consultancy Services. ANZ is probably the worst though. They have moved a huge amount of work offshore.
To Mumbai.

Any expressed market opinion is my own and is not to be taken as financial advice
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NotFooled
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The Bear Whisperer

The quality of offshore work is appalling, but the cost is so much lower than in Australia that it is irresistible for companies. Maybe it is hypocritical to complain too vehemently since consumers also overwhelmingly prefer to buy much cheaper products manufactured off shore.
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genX
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NotFooled
9 May 2012, 07:50 AM
The quality of offshore work is appalling, but the cost is so much lower than in Australia that it is irresistible for companies. Maybe it is hypocritical to complain too vehemently since consumers also overwhelmingly prefer to buy much cheaper products manufactured off shore.
The problem is not the offshoring, the problem is that they are offshoring the wrong people, i.e. staff who actually do work, not much savings to be had there since they are paid such shit wages.

A company like CBA spends around 1 billion a year on clueless overpaid executive fucktards. You could offshore all of those management positions, and even if the offshore staff did nothing, it would be a net gain in productivity.CBA would save close to $900 million a year in the process. Of course without the idiot executives giving themselves massive bonuses, those savings would accrue directly to the shareholders, so obviously the idea is unpopular.

Offshoring is about managers and executives getting rid of staff who know that their managers are incompetent morons and getting in some old world servants to call them Sahib and pretend they like them.

Still, karma is a bitch. When the whole of Australia has been de-skilled, the Indians will be putting the price up.

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themoops
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genX
9 May 2012, 08:51 PM

It's a tragedy that the dumbest of the smart people, ie the people who do business/economics/finance run the country.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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