After more than a decade of non-stop growth, Australian banks are bracing themselves for a slowdown in credit growth. In an effort to cut costs and protect profit, most of the big banks have started to announce job cuts for 2012. The latest to do so was Australia and New Zealand Banking Group (ANZ), the country’s fourth-largest bank, which on Monday said that it will cut approximately 1,000 jobs in 2012.
ANZ which employs close to 24,000 people inAustraliainformed 492 employees on Monday that their roles would be affected. In a statement, the bank said that the job cuts will primarily be in middle-management, back-office and support functions. Job cuts in the global banking industry are common in turbulent market conditions.
ANZ’s announcement comes on the heels of Westpac saying that it would cut 400 jobs in 2012. Credit growth is at the lowest level in almost four decades, and as households savings increase and corporates pay down debt, banks are being forced to trim their costs.
Analysts are predicting that as the slowdown takes its toll on margins, the Australian lenders seeking to rein in costs could cut thousands of jobs, some possibly inAsia. According to Brian Johnson, banking analyst at CLSA, it is quite possible that across the industry, seven-to-eight thousand jobs could be cut domestically.
The Financial Sector Union was severely critical of ANZ’s move to slash jobs and asked the government to intervene. “This is an incredibly profitable, iconic Australian employer that can afford to keep every one of these workers in place and continue to make multi-billion dollar profits,” said Financial Sector Union national secretary Leon Carter. If conditions do not improve, Carter fears the banking job cuts will continue, and over the next couple of weeks is set to meet the National Australia Bank and Commonwealth Bank, two of the country’s biggest banks, to urge them not to follow Westpac and ANZ. Citing intense pressure on margins due to higher funding costs and slow lending growth, ANZ last week decided to raise mortgage rates independently of the central bank, which angered its customers and Australian political leaders.
Australia’s top four banks are among the country’s largest employers with close to 40,000 employees each. Australian banks have enjoyed almost uninterrupted growth for more than a decade, which saw their assets and profits grow several-fold. The big four banks ofAustralialast year together made a record profit of $25 billion.