Slowdown toll mounts as finance giants announce global job cuts
The United States economic slowdown continues to claim victims with the recent news that investment banks have started to cut jobs.
This follows recent lay-offs at media giants such as NBC and CNN and car-maker DaimlerChrysler.
Both ING Barings and Deutsche Bank announced last week that corporate restructurings were to take place. ING Barings will cut 1,000 jobs worldwide, while Deutsche Bank is set to slash payroll by 2,600. The restructuring has also affected some of the investment banks and securities houses in Hong Kong.
'There has been a major restructuring of management,' said one Credit Lyonnais Securities Asia (CLSA) employee. While there have been no job cuts so far at CLSA, the staffer warned that the situation was not promising. 'We keep being told things are looking up but it's difficult to tell.'
The decision by Federal Reserve chairman Alan Greenspan to cut interest rates has also contributed to the realisation that the time for purse-tightening may be upon us.
Kenneth Davies, chief economist and bureau chief at the EIU, believes one way people can interpret the rate cut is as a precursor for difficult times.
'People will say this is the first time in 15 years that the Fed has cut rates by that much,' Mr Davies said. 'Something bad may be coming so people will decide to play it safe.'
Deutsche Bank has confirmed its plans to axe 2,600 jobs as part of a reorganisation that will see the world's second-largest bank split into two units. About 100 employees in the Asia-Pacific region will lose their jobs.
The bank denied speculation the restructuring was linked to the US recession.
'The staff reductions . . . are not at all influenced by the business cycle of the US economy,' a spokesman for the bank's Frankfurt press office said. 'They will result from synergy effects of the new structures, for example, rationalising the technology support and operations platform and the elimination of functional overlaps.'
But Mr Davies appeared unconvinced by this type of explanation. 'There's a lot of rationalisation and it's being triggered by the thinking that the good times are over,' he said.
'People say they are for efficiency gains, but they don't say this when the economy is growing at 5 per cent.'
Earlier last week, ING Barings spokesman Manel Vrijenhoek confirmed that numbers would be cut in Asia.
'There will be no redundancies in Asia, but there is a possibility that there will be a small reduction in head count due to the in-and-out flow of staff, mostly in support offices,' he said.
ING Barings aims to save 500 million euro a year by cutting 1,000 jobs worldwide.
The Wall Street Journal also reported last week that Credit Suisse First Boston is to cut staff by 8 per cent. Previously, NBC had announced it would lay off 10 per cent of its workforce. CNN, meanwhile, also announced it was cutting 1,000 jobs.
The New York Times had previously sacked 69 people from its digital division, and News Corp's Internet division staff was halved.
The cuts have not been confined to just media and finance companies. General Electric recently stated that 75,000 employees would lose their jobs over the next two years.
Online broker Charles Schwab has asked 15,000 employees to take unpaid leave over the next few months to cut costs.
Mr Davies said he had seen first-hand the effects of the US economic slowdown on a recent trip to the country.
'I noticed that Sears had closed 89 branches,' he said.
He also believes that factors other than the US recession may be responsible for the job cuts.
'It's probably partly to do with the slowdown,' said Mr Davies. 'In Europe, it's partly to do with the euro.'
