Finance-industry workers brace for cuts as trading slows

As stock and bond trading slows, financial firms are trimming expenses by cutting payroll. Bank of America Corp. and Goldman Sachs Group, for instance, have announced layoffs. Overall, the industry so far is cutting 1,300 workers.

Bank of America, the biggest U.S. bank, cut about 60 positions in its equity-sales and trading division in June. Meanwhile, Goldman, the biggest U.S. bank by assets, plans to eliminate 230 jobs in New York starting in September, according to a filing the firm submitted to the state's Department of Labor.

The firms join Barclays P.L.C. and Credit Suisse Group A.G., which are cutting investment-banking workers as they grapple with reduced revenue from buying and selling securities. Fixed-income - that is, bond - trading revenue at U.S. banks probably dropped 30 percent in the second quarter from the previous three-month period, while equities trading fell 15 percent, Keith Horowitz, a Citigroup Inc. analyst, wrote in a report late in June.

"From a sales and trading perspective, the results will be ahead of last year's second quarter, but below the seasonally strong first quarter," Bruce Thompson, Bank of America's finance chief, said in a conference call with analysts this week.

Jobs in the nation's financial industry dropped in 2010 to an average of 7.63 million, about 8.4 percent below the 2006 peak, according to the Bureau of Labor Statistics.

The jobs being cut might not return, Richard X. Bove, an analyst at Rochdale Securities L.L.C., wrote in a note this week. Large banks face higher costs and "inhibited" growth by new capital requirements and regulations including overdraft-fee limits and proprietary-trading bans, he wrote.

"The banks are reacting to these new constraints on their activities by shrinking, sending jobs and business functions overseas, and beginning to cut employment in this country and more specifically New York," Bove wrote.

Credit Suisse Group, the second-biggest Swiss lender, is planning to cut more than 600 jobs in its investment bank, including more than 100 in the London office, while Royal Bank of Scotland Group P.L.C. is paring about 200 jobs at its investment-banking unit in the United Kingdom and elsewhere in Europe.

Also, Lloyds Banking Group P.L.C., Britain's biggest mortgage lender, said on Thursday it would cut 15,000 jobs and reduce costs by $2.4 billion by 2014. HSBC Holdings P.L.C., Europe's largest bank, will cut about 700 employees who offer advice on financial products in branches, a person briefed on the talks said Friday.