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From The Sunday Times

March 23, 2008

And now the human cost as workers brace for redundancies

Job losses in London’s financial services sector could reach as high as 20,000

Ben Marlow

IF the past eight months in the City have been grim, then the financial sector should hold on tight: the situation is likely to get worse and job losses in London could surpass those seen after the dotcom crash, according to experts.

As the City digests the bailout of Bear Stearns and prepares for an economic downturn, forecasters are tearing up the job-market predictions they made only a few months ago.

Experian Business Strategies said that job losses from a workforce of about 350,000 in London’s financial-services sector may reach as high as 20,000 - nearly 20% more than the 17,000 witnessed after the collapse of the dotcom bubble in 2000.

Andrew Burrell, an economist at Experian, said: “This is different to the dotcom crash – the downturn was in a sector not an industry. This is a more deep-rooted, fundamental crisis. Northern Rock seemed like a one-off but [the problem] is more systemic.”

Last October the Centre for Economics and Business Research predicted that in 2008 the London financial sector would suffer 6,500 redundancies. It recently raised that figure to 10,000.

Some 2,000 London-based financial jobs are estimated to have gone so far this year but this is likely to be just the tip of the iceberg.

At Citibank, 15,000 jobs are expected to be axed globally and Lehman Brothers is shedding more than 5,000 staff worldwide. Three hundred jobs have gone in the global markets division of Deutsche Bank. Bank of America is shutting down its energy and trading desk in London. And losses of 150 are expected at both Credit Suisse and Morgan Stanley.

At Bear Stearns, most of the 1,500 staff in London are expected to be axed after the takeover by JP Morgan.

“Sections of the market have just shut down and of course that must lead to substantial job cuts. It’s not clear where future revenue streams are going to be,” said Jonathan Baines, chairman of the recruitment firm Whitehead Mann.

Robert Watsham, partner at the executive search firm Odgers, Ray and Berndtson, said: “Certain product lines such as structured credit and property investment have just died a death overnight.”

Douglas McWilliams, chief executive of the Centre for Economics and Business Research, believes that many of the big banks are preoccupied with their sub-prime losses. “You would expect more job losses but we’re not getting this yet. The banks are focusing on surviving. Announcing a redundancy programme won’t affect that.”

However, the doom and gloom doesn’t extend to all parts of the globe. Financial-services companies are concentrating on emerging markets, and in places such as China, India, Russia and the Middle East where economies are booming, demand for new talent is high.

A BANKER’S TALE: HOW I GOT THE SACK

THE RUMOURS were circulating for days. Nobody had any idea who was on the list, or how many jobs were going – although I think that the numbers ended up being pretty close to what the rumours had said.

When I heard them myself, I decided, not just for me but for my team, to see if I could get any information. I tried for two days to get hold of my boss. I can only assume that she was ignoring me, or avoiding me.

By the time I had gone home after a second day of unreturned phone calls, I was pretty much convinced my name was on the list.

The next day we came in as normal. My pass worked, but my computer did not allow me to log on. They said that it was some kind of memory problem.

It may have been completely innocent. But you do wonder if someone in IT has switched you off before you were meant to be switched off.

We had our usual 10am staff meeting. We made the typical jokes about whether we would be there at the same time the next week – gallows humour.

I got back to my desk and a few minutes later I got a tap on the shoulder. It took less than a second for the penny to drop.

My boss just said: “Can you come with me please?”

It’s quite a long walk across the dealing floor. My boss was completely silent. My own feeling was that she was too ashamed to say anything. There was nothing to say. It was clear we were going to personnel.

My boss was embarrassed and ashamed. She seemed more upset than I was.

I know it’s not a nice thing to have to do, but if you want to be a manager, that’s part of it. There is a way to behave. Someone told me that his boss went to say “sorry” - but couldn’t even remember his name.

Everyone knows in an investment bank that there is always a risk that, if revenues turn down, you have to cut the staff. At management level everyone tries to protect their own territory.

People act in different ways. Some try to make sure they have a team of good people and not-so-good people so that they can get rid of the dead wood. Some people decide that they will manoeuvre the situation to make sure that other departments are the ones that suffer the cuts.

Ultimately, part of the reason I was on the list is that there are people there who are better at the internal politics of an investment bank than I am – better than I would care to be, if I am honest.

The bank has given us four weeks to consult over the redundancies, which is a legal requirement. But it’s a bit of a farce to do that when you’ve already told people that the job they were doing no longer exists.

I don’t know what my compensation might be. All I know is when my notice period ends.

They didn’t send me back to my desk with a black bin liner and stand over me, as I have heard happens elsewhere. I was allowed back to my desk and was told my computer would work until the end of the day.

I stayed in work for a few hours more, tidying up. Once I was ready to go, I used the rest of the day to talk to people to see who had vacancies.

In the present environment there will be no net hiring in the City. There will be shrinkage.

If I was going to be made redundant, I was relieved that I was made redundant in the first wave. If I am right, there will be a lot more people made redundant in the next 12 months – I feel lucky, in a way.

People take this in different ways. Some say, I’m going to take three months off, six months off, and then try to come back into the market.

I take a different view. I am going to have to serve my gardening leave come what may. Therefore, I will go hell for leather right now to try to secure a job, and then go on my gardening leave, knowing I have something to come back to.

I’m conscious that, in this situation, if I don’t get back into the City quickly I may not be able to ever.

ex bankers should go work for the FSMA for a song and try to highlight all the things that can go wrong with risk management and how they try to subvert their controllers.

soggy, London , UK

This chap could always retrain as an engineer...

Oh sorry, I forgot... The City has spent the last decade trying to eliminate engineering companies so there won't be many jobs there either..

What you reap etc....

DickW, Aberdeen, Scotland

Just like any factory or office worker, why the crocodile tears?

No rainy day strategy, even though they are asking for the umbrellas back!

Tom Taylor-Duxbury, Ludlow, UK

Once I work d in the City, actually I worked for various Banks. Can't say I miss one second of it. These days I prefer to work for small and young companies. Where people are friendly and the clique has not been established.

Costas, Cyprus,

Presumably the Eurpoean Arrest Warrant WILL have its unintended non racist result.

Well, for the Financial 'Services' 'profession?' that is...

Austin Tassletine , South West, UK

Unemployment is a fact of life for every sector of society, any reason we should feel sorry for high flying rich bankers who have just had two decades of record bonuses and caused financial mayhem for millions of home owners?

Jon, London,

Looking back from 1930's, Wall Street Crash depression, apart from the two world wars gap, 70's secondary banks ,80's black Monday,90's Black Wednesday . There are nothing new,In this selfish world, look after number one !!

Ricky , Oxford, GB