Many leading banks in Europe over the past year have been rigorously cutting jobs in the UK, part of an ambitious cost cutting strategy that was implemented in part to help restore profitability to a moribund banking sector. Lenders such as Deutsche Bank, Standard Chartered, and Barclays have all spearheaded this strategy, in many instances cutting or relocating personnel out of London.
As recently as last quarter, Deutsche Bank’s CEO John Cryan tripled down on this strategy, opting to scale back operations in London as part of the company’s bid to spark profitability to the bank. However, not all banks appear to be charting the same course into 2017 and beyond, especially given the shifting climate of the EU banking sector and influence of an upcoming Brexit.
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According to UBS Group AG’s CEO Sergio Ermotti in a recent Bloomberg Television interview: “It would be a very risky decision to take such steps. It may well be that we are not going to move anybody, or it may be that we move people. But in absence of certainty, we won’t take any decision.”
The stance is not surprising, especially given the lack of clarity surrounding the upcoming negotiations between the UK and EU that will see the two diverge. Such a fallout and the manner in which the European banking system settles in could also dictate a shift in personnel, labor costs, etc., factors that at present are merely conjecture.
Still, there are already a number of factors embedded in the UK banking sector that have facilitated job cuts or relocations out of the country or region. Labor costs in the UK have ballooned in recent years, leading to an outflow of back office and IT jobs to other locations such as Southeast Asia – this has been a nearly universal trend amongst big banks.