NEW YORK, Aug. 29 (UPI) — A painful reality of lower expectations is beginning to feel real to the U.S. banking community, a former investment banker said.
“People heard all these things before, but the reality of seeing the numbers is finally sinking in,” said John Chrin, formerly an investment banker at JPMorgan Chase, now associated with Lehigh University.
Banks are undergoing a second wave of layoffs, frequently cited as the quickest way to reduce costs, The New York Times reported Monday.
“It’s hard to imagine big institutions achieving their pre-crisis profitability levels,” Chrin said, which means banks are not only laying off staff, they are seeking new ways to raise revenue, including annual fees on services that never had them before.
Southeastern bank SunTrust has recently added a $5 monthly fee to customers who use debit cards to pay on-going bills. Wells Fargo is also planning an additional $3 monthly fee to debit card users, starting with a test run in five states.
Other banks are canceling customer incentive plans or cutting back on free programs.
Meanwhile, UBS and Bank of America have announced layoffs of 3,500 workers with thousands more layoffs possible at BofA.
Banks laid off more then 428,000 since the financial crisis began. By late 2010 and early 2011 hiring had begun again, but that didn’t last long. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, and HSBC are among the larger banks that have announced layoffs recently, the Times said.
Smaller profits will likely mean smaller bonus checks or raises. Johnson Associates, a firm that consults with banks over compensation, expects trader bonuses will drop 15 percent to 30 percent for 2011 with investment and commercial banker bonus checks holding steady.
Moody’s Analytics has said hiring this year will be down to levels seen in 2000. “The trajectory of revenue growth may be lower for quite some time,” said Moody’s financial industry analyst Marisa Di Natale.