In late March with markets plunging and the economy grinding to a halt, the big banks scrambled to assure their employees that they would still have a job in the coming months amid the chaotic carnage. This is what Reuters reported at the time:
Big banks are postponing decisions about staff cuts as the coronavirus outbreak hits their businesses hard, with executives saying they are unsure how long the outbreak will hurt the economy and worried about being unprepared if business suddenly snaps back.
Morgan Stanley, Goldman Sachs, Wells Fargo, Deutsche Bank, HSBC and Citigroup were among those on Thursday reassuring staff privately or through public statements that job cuts are not on the table.
Banks are hesitant to make changes because the future is so uncertain, executives and external consultants told Reuters.
«You would be fibbing if you said we can really make guarantees or assurances to you,” said compensation consultant Alan Johnson in late March. «There’s a danger of making promises that you ultimately can’t keep. Nobody knows.»
He was wrong: with banks you know that any time they promise something, expect the opposite, and whether because the future is suddenly far more «certain» or just because they couldn’t stem the bleeding any longer, on Wednesday Europe’s largest banks resumed plans to cut thousands of jobs after putting dismissals on hold to «show support» for employees after the pandemic spread across the continent.
HSBC Holdings became the latest lender to restart reductions with a plan to eliminate as many as 35,000 jobs. CEO Noel Quinn put the plans on hold in April, only two months after announcing the initiative; he has now flip-flopped back. Europe and the U.S. are expected to face the brunt of HSBC’s job cuts.
And just to make sure that banker morale is crushed across most of Europe, where NIRP has made bank profitability a joke for the past 6 years, Deutsche Bank, Credit Suisse and UniCredit have also restarted job-cut plans.
And yet, even as bank profitability tumbled and the resulting deferred layoffs are finally starting to hit, the banks had no problem paying off their shareholders. According to the FDIC, the regulator is monitoring US banks’ dividend policies after they declared payouts totalling almost twice their earnings in the first quarter, eroding capital cushions as the coronavirus crisis took hold.
The country’s 5,100 lenders and savings institutions declared dividends of $32.7bn for a quarter when they made profits of $18.5bn — 70% less than the same period the year before.
To think — if only the banks had been slightly less generous with their shareholders during the biggest financial crisis in generations and paid only 100% of their earnings out in dividends, most if not all of these jobs could have been saved.