The consolidation and rationalisation of the financial services industry will continue in 2009, with merger and acquisition activity to result in ongoing job losses.
Storm Financial’s 115 staff were among the first to lose their jobs this year after the group entered voluntary administration and was closed down earlier this month, while it is speculated Credit Suisse will be facing job cuts when the sale of its investment business to Aberdeen Asset Management is finalised later this year.
Figures from the Australian Bureau of Statistics suggest there were around 20,000 jobs lost in the banking and finance sector to the end of the November last year. And Financial Services Union (FSU) national policy director Rod Masson said the job losses are likely to continue during most of 2009.
Masson said among those to feel the pressure will be smaller players, who will suffer as a result of the current economic environment, as well as those whose business models are too highly leveraged.
“It looks pretty bleak. We are still going to see some of the small peripheral players get washed away as a consequence, particularly those who are highly geared, such as what we saw with Storm Financial,” Masson said.
Another sector of the industry likely to face further job cuts this year is the mortgage and lending sector, Masson said. One example of this is Wizard Home Loans, which was recently acquired by Aussie Home Loans. The majority of Wizard’s existing staff lost their jobs on Wednesday this week as a result of the acquisition. Of more than 40 employees of Wizard, only a handful were retained.
“There is a tightening coming now for mortgage brokers and the non-bank sector, which will undoubtedly continue to struggle with the cost of funds,” Masson said.
There is also likely to be consolidation and job losses in the credit union sector, with credit unions forced to merge to create economies of scale. Masson said the FSU is also still waiting for the finalisation of job cuts at ANZ, as well as the “wash-through of the mergers between Westpac, St George, BankWest and [Commonwealth Bank]”.
In many businesses, internal support processes such as roles in the head office, marketing, public relations, human resources and IT will be the hardest hit. And while those employees who are spared their jobs during this downturn will be grateful, they will likely face downwards pressure on wages and increased workloads.
“We’re very aware that there is survivor syndrome for those who are left. There’s a double whammy impact. There’s the impact on their morale of having lost mates and friends, and then there’s the secondary impact of increased work pressure because all of that work that still has to be done,” Masson said.
