Swiss banking has shed almost 1,000 jobs in the first six months alone. But the reasons behind the cuts have not much to do with cost savings.
Since the financial crisis, the banking industry in Switzerland has cut almost 5,000 jobs in full-time-equivalents, 1,660 alone in 2016, according to the latest banking barometer, which is compiled annually by the Swiss Bankers Association.
And things won’t get better anytime soon. In the first six months of 2017, the companies have eliminated 971 jobs, despite assurances by most banks that the employment levels would remain little changed this year.
Profits Down – Employees Cut
Fact is that the cuts won’t end as long as banking has to reduce the cost levels. And there is little to suggest that the trend will change soon. The total profits generated by Swiss banking in 2016 were about half of what the companies had posted in 2015.
Five banks gave their licenses back last year, while interest and commission income declined. Switzerland’s strength as an offshore asset manager was badly under stress following the government’s promise to eliminate banking with untaxed money. So, the pressure on banks has increased if anything.
Numbers Down, Total Pay Up
Interestingly, Swiss banking still managed to spend more on personnel, despite the cuts in absolute numbers. The total expenditure rose 0.6 percent last year, following the whopping 4.4 percent increase in 2015. So the wage bill rose even as jobs have been eliminated.
The bankers’ association said that the jobs to go were those in the back offices, typically those on lower salaries. And the banks hired expensive bankers for the front, in private banking and in distribution for institutional clients.
And digitization will further fuel the trend, according to the industry association. Fintech experts are sought after, back-office staff less so.