NEW YORK - The US financial industry has been shedding jobs at a record clip, and some analysts predict the pace will only accelerate over the next year-and-a-half as banks cut costs in the face of the housing market slump and the weak economy.
Analysts at the financial research firm Celent LLC said in a report yesterday they expect the US commercial banking industry - essentially, all companies that lend or collect deposits - to lose 200,000 of its 2 million jobs over the next 12 to 18 months.
An annual loss of 200,000 jobs at US commercial banks would be an unprecedented number.
In 2007, the entire financial services sector - which consists of mostly commercial banks - disclosed job cuts that totaled a record 153,000, according to the job placement consultancy Challenger, Gray & Christmas Inc. More than half of those cuts were in the mortgage-lending business, and occurred all over the country, but particularly in New York and California.
Octavio Marenzi, the head of Celent's financial consultancy unit, said more layoffs are inevitable as the subprime crisis hits other parts of the banking industry and spreads beyond mortgages to mortgage-related products, such as home-equity loans, and other types of lending, such as credit cards.
"The banking industry over the past 40 years has never seen a downturn in its revenue growth," Marenzi said. "In 2008, it looks like it will decrease for the first time in living memory. They're going to have to respond with severe cost-cutting. It's not an environment they're entirely used to."
The credit crisis began in earnest last summer when the markets tightened up at the sight of spiking subprime mortgage defaults.
"There's no horizon yet that anybody can see," said John Challenger, who runs Challenger, Gray & Christmas. "New events keep rolling out . . . suggesting that there's more to come."
Financial services companies said in January they were cutting 16,000 US jobs, and companies said in February they were trimming 6,000 more, Challenger said. Those figures are below last year's peak in August when companies said they were cutting nearly 36,000 jobs, but analysts expect further bloodletting in the coming months.
Many banks that have reported huge losses have so far not held significant layoffs outside the mortgage area, Challenger added.
And Celent's estimate does not include the securities industry, which currently employs some 800,000 - more than it ever has, after a multiyear hiring spree, Marenzi said.