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Triangle likely to feel bank job-cut tremors
(News & Observer, The (Raleigh, NC) (KRT) Via Acquire Media NewsEdge) May 6--Struggling global banks are cutting tens of thousands of workers in an attempt to weather the mortgage-related financial storm.
Though the Triangle has been mostly spared so far, the layoffs are just beginning, and local operations of financial companies will not be immune, experts say.
Investment banks Merrill Lynch and Citigroup announced plans to slash about 15,000 jobs this year, and possibly more in 2009. Swiss bank UBS is expected to announce it will cut thousands of jobs when it reports financial results today.
Charlotte-based Wachovia, which laid off hundreds of workers last year, is cutting 500 more from its corporate investment bank because of recent losses. Most of the cuts will be in New York and Charlotte, said Wachovia spokeswoman Christine Shaw. The company employs about 2,300 in the Triangle who will not be affected, she said.
But the next round of layoffs will not be limited to investment banking in major financial centers. It will occur everywhere banks can cut costs. And as the credit pinch continues, the pain could trickle down to include smaller and community-based banks in the Triangle.
"Remember that bankers aren't just bankers, they're also human resources people, IT people, accountants and attorneys," said Tony Plath, a finance professor and banking industry expert at UNC-Charlotte. "Basically what you can count on is a lot of people other than finance professionals out there looking for work."
Broader reductions could bode poorly for the substantial investments made by local officials in recent years to lure financial companies such as Credit Suisse and Fidelity Investments. Whether those investments pay off depends partly on the ability of such companies to continue meeting local job-growth and investment targets.
For now they are.
Zurich-based investment bank Credit Suisse last week reported a first-quarter loss of $2 billion. But the company still plans to increase its local head count this year from 850 to 950.
Credit Suisse's data processing operation in Research Triangle Park remains necessary, regardless of investment banking losses in the U.S subprime debacle, said Jim Captain, Credit Suisse's director of operations in RTP. Furthermore, the Triangle is a cheaper place to crunch data than New York or London and is therefore less likely to get trimmed during times of austerity.
Boston-based Fidelity Investments also is hiring and remains on track to expand its local work force from 2,500 to 3,000 by the end of 2009, according to company spokesman Vin Lowporchio. The mutual fund giant has benefited from an uptick in retirement investing and plans to complete a corporate campus in RTP by 2011.
According to a report issued this month by research company Celent, U.S. banks will have to cut operating costs by more than 15 percent this year. And "any meaningful reduction in expenses will be accompanied by significant headcount reductions," authors of the report stated.
That means U.S. banks alone might shed another 200,000 jobs in the next 12 to 18 months, according to the Celent report. Financial companies in the United States and Europe so far have cut a mere 70,000 jobs, according to data firm Experian.
The trickle-down effect of the increase in job-seekers will be lower wages across other industries, including Triangle staples such as research, technology and healthcare, Plath said.
There might already be hints of things to come. SunTrust, which reported lower earnings in four of the past five quarters, announced last week that it will outsource 60 jobs in Durham, part of companywide cost cutting.
frank.norton@newsobserver.com or (919) 829-8926
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Copyright (c) 2008, The News & Observer, Raleigh, N.C.
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