LONDON: Europe’s largest banks cut their staff by another 3.5% last year and the prospect of a return to pre-crisis employment levels, seems far off, despite the region’s fledgling economic recovery.

Spurred into action by falling revenue, mounting losses and the need to convince regulators they are no longer “too big to fail”, banks across the globe have shrunk radically, since the 2008 collapse of US bank Lehman Brothers sparked the financial crisis.

Last year, the tide of bad news began to turn for European banks, which are among the region’s largest employers. Helped by recovering economies and receding fears for the eurozone’s future, the benchmark Stoxx Europe 600 Banks index rose 19%, outpacing the 17.4% increase in multi-sector stocks.

But despite the improved outlook, Europe’s 30 largest banks by market value, cut staff by 80,000 in 2013, calculations by Reuters, based on their year-end statements, showed.

Recruitment consultants warn that workers’ hopes for a turnaround this year, could be misplaced as bad news for countries like Spain, where tens of thousands of bank layoffs have helped drive unemployment to 26%.

However, while painful for the people who have lost their jobs, the reduction of large banks’ workforces, through a combination of asset sales and redundancies, means that banks won’t have as big an impact on overall employment, in future crises.

Antoine Morgaut, chief executive for Europe and South America at recruiter Robert Walters, does not expect the industry’s employment to ever return to what it was in its heyday of 2008. Then, the 25 of the top 30 banks, with comparable figures, employed about 252,000 more than the 1.7 million they do today. “It’s been a bubble for 20 years,” said Morgaut.

“In speciality areas, we are seeing a bit of an upside, but it is quite marginal and it will stay like that, for the next six to nine months,” he added. — Reuters

This article first appeared in The Edge Financial Daily, on April 14, 2014.