It certainly cannot be denied that the world of banks suffer severely from the financial crisis. But as usual, to get the accounts back on the balance sheets of the institutions, devastated by capital losses on loans, stranded assets, freezing of the interbank market and reduction in funding, the first to lose out will be the workers, subject to internal restructuring programs and renewal of industrial plans that will lead, over the next few years, to a dismiss Dozens of thousands of employeesi.
The global dimension of the crisis does not forgive, and institutions will soon have to implement strategic solutions for their future. In the face of often declining profitability and plummeting margins, cutting internal costs means making strong decisions, going into conflict with the unions, putting entire families on the streets. It is, on the other hand, the additional cost to be incurred when the bursting of a financial bubble strips sectors no longer sustainable of the business.
Italy, Spain, Switzerland, the United States are the frontiers of the new corporate reorganisations. And not a week goes by without new credit giants sounding the alarm layoffs. It is yesterday's case Citigroup, one of the largest universal banks, which through the mouth of the new CEO, Michael Corbat, announced a redundancy plan for 11.000 employees, cuts to be made in “areas and products that no longer guarantee significant returns”.
The Citigroup case, as mentioned, is not the first: in Spain the bank employees, in exchange for the 39,5 billion euros granted by the ESM in the context of the recapitalization plan, had to swallow a very bitter pill: the giant Bankia (a merger of seven lenders), among the first to announce the restructuring plan, will reduce the workforce by 25%, eliminating approximately six thousand contracts and 39% of the production branches, with the aim of returning to profitability by the end of 2013.
He's not even joking Switzerland, Where ubs will focus interventions above all in the wealth management sector, substantially affecting the trading business, now considered by many banks to be dry branch. Branch which, in the Swiss case, has accumulated losses up to 50 billion dollars in the years of the financial crisis. The purge of traders, in Bern, is unbelievable above all in its form: part of the staff only became aware of the dismissal when passing the badge, deactivated, at the turnstiles. Then directed to the human resources office, they received a bag containing personal effects and a letter, stating two weeks' pay from the moment of dismissal. So Ubs cut 10 thousand employees, 15% of the staff, after having reduced the workforce by another twenty thousand since 2008.
As to Italy, the banking sector of Italy absorbs total employment for 325 thousand seats. But even here the ax of layoffs is becoming more and more threatening, arousing the protests of the Fabi - the trade union - when it is believed that there are redundancies for 25 or 35 thousand units throughout the sector, not guilty – it must be admitted – of having ridden the easy wave of creative finance in the boom years, but guilty of carrying the weight of lack of innovation and declining productivity from time immemorial.
Strong is the concern of the main number one in the sector, who are already looking with fear at the expiry of the contract in force which provides for, according to a confidential document from the ABI, "absolutely unsustainable table increases".
The nature of the banking crisis in Italy is not that of moral hazard: the link between sovereign risk he bank balance sheets worsened as institutions stuffed themselves with BTPs, to profit from the high yields promised by public bonds, especially after the extraordinary refinancing auctions (Ltro) promoted by Mario Draghi between the end of 2011 and February 2012. A perhaps short-sighted strategy but which it averted the collapse of the sector and, in part, kept the prices of government bonds afloat.
Sovereign risk, in addition to reducing the value of the assets – then recorded at market value in compliance with Community legislation – has reduced the profitability and fluidity of the interbank market, freezing the entire economy. It is a dynamic that makes the current production structure unsustainable and the reduction of personnel cannot be postponed, forcing our local banks to catch up on production processes, particularly on the web, which often see them lagging behind their European competition: the growth of online banking it requires to adjust the industrial plans by freeing the bank from its presence in the area, outsourcing some branches and keeping wage dynamics under control.
One wonders when the moment will come when the management of institutions will see their remuneration truly correlated to long-term results. The literature that studies corporate governance processes, from this point of view, is already full of useful contributions and indications. It would only be a matter of applying them, to prevent credit crunching giants from being bailed out of taxpayers' pockets, while the supermanagers responsible for crack collect bonuses in stock options worth millions of dollars.
