Bank Layoffs Mostly Over, Slow Recovery Seen
While most banking leaders say their institutions are finished cutting heads, they don't foresee a hiring pickup next year, a new survey indicates.
Two-thirds of senior executives polled by KPMG say they've completed headcount reductions, while just 15 percent anticipate further job cuts. Still, only 30 percent look for the industry's employment situation in 2010 to be better than today.
KPMG's "Industry Pulse" survey reflects responses of 130 financial services CEOs and other C-level executives between May and July. Slightly more than a third of the group expect the industry to fully recover ahead of the overall U.S. economy.
"The downturn impacted the banking and financial services industry to a greater degree than most industries and therefore it will take longer to fully recover," says Tony Anzevino, partner-in-charge of the banking and finance practice at KPMG. "And although the results of this survey suggest senior leaders think the industry has hit the bottom of the downturn, clearly they still indicate that finding new sources of revenue and improving their management of risk will be major challenges in the year ahead."
Real Estate Market Viewed as Vital For Recovery
Asked which factors are most critical for spurring economic recovery, 46 percent cited stabilizing the real estate market as the key trigger. Other widely mentioned triggers were growth in jobs and improved consumer confidence. In contrast, very few respondents looked to effective regulations (6 percent), government stimulus spending (3 percent), or government bailouts / Troubled Asset Relief Program (2 percent) to help spur a recovery.
It's no surprise that overhauling risk management and clamping down on operating costs were high priorities for many financial services executives in response to the economic downturn. More than half say their organizations have created or modified their risk management plans, and another third are in the process of doing so. Forty-five are relying on information technology to reduce operational costs, and about one-third are doing more outsourcing.
Adds Anzevino: "We've had an increasing number of discussions around better risk management and better cost control, and we also see they're getting back to basics with less reliance on complex structured products. The silver lining in this economic cloud may be that these actions could ultimately result in a stronger, more secure banking system."