Fresh fears emerged on Wednesday that as many as 30,000 jobs could go after Bank of America's takeover of Merrill Lynch. The bad news for the 260,000-strong combined workforce at the two banks came as an influential employment survey reported record layoffs in the financial services sector in November.
It was one of a number of dire reports on jobs released before Friday's official employment report, which is expected to show that American employers cut as many as 360,000 jobs last month.
Economists gave warning that depressing employment data could send already nervous stock markets tumbling. Rob Carnell, chief international economist at ING, described the outlook for the labour market statistics as “very, very bad”. He said: “Any decline in payrolls of the magnitudes we now expect could drive already jittery markets into a substantial reaction.”
CNBC reported yesterday that Bank of America (BoA) could cut up to 30,000 jobs as it subsumes Merrill Lynch — three times as many staff losses as previously estimated. Ken Lewis, BoA's chief executive, is seeking to extract savings of $7 billion (£4.7 billion) from the $50 billion all-share deal. He declined to comment on the report yesterday, telling the Charlotte Observer that the bank was in the “final stage of our analysis” for job reductions in its Merrill Lynch purchase.
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Nomura to cut up to 1,000 London jobs
Citigroup to cut another 52,000 employees
Most of the cuts are expected to come from Merrill Lynch, the world's biggest brokerage, which was forced to find a suitor in September as a way out of its funding crisis. John Thain, Merrill Lynch's chief executive, admitted in October that the deal would result in “thousands” of layoffs.
Yesterday, the Challenger Report, published by Challenger, Gray & Christmas, America's oldest outplacement firm, said that 91,000 jobs had been shed in the financial services sector in November, hitting a nine-year high.
It is the first snapshot of recent job losses at the banks and other financial companies since Monday's announcement that the economy has been in recession for a full year. The last time that job losses in the financial sector came close to November's figure was in March 1999, when 22,000 positions were lost amid the Russian and Asian crises. November's figures were a sharp increase on the 18,000 layoffs reported for October and the 7,000 cut in November last year. About 226,000 jobs have been lost in American financial services so far this year.
The growing fears over jobs came as the Federal Reserve's Beige Book report found that economic activity had weakened further in recent weeks.
The report, which will be used by the central bank's policymakers for their December meeting on interest rates, indicated a further decline in already grim economic conditions.
“Overall economic activity weakened across all Federal Reserve districts since the last report,” The Beige Book said. It noted weak consumer spending and that car sales were “down significantly” in most regions.Manufacturing declined and housing remained soft, due to “reduced selling prices and low, but stable, sales activity”.
The Beige Book, based on a survey of the 12 regional Federal Reserve banks, found few bright spots. Significantly, the report found credit conditions tightening, further constricting economy activity. “Lending contracted, with many districts reporting reductions in residential, commercial and industrial lending and tightening lending standards,” it said.
It was one of a number of dire reports on jobs released before Friday's official employment report, which is expected to show that American employers cut as many as 360,000 jobs last month.
Economists gave warning that depressing employment data could send already nervous stock markets tumbling. Rob Carnell, chief international economist at ING, described the outlook for the labour market statistics as “very, very bad”. He said: “Any decline in payrolls of the magnitudes we now expect could drive already jittery markets into a substantial reaction.”
CNBC reported yesterday that Bank of America (BoA) could cut up to 30,000 jobs as it subsumes Merrill Lynch — three times as many staff losses as previously estimated. Ken Lewis, BoA's chief executive, is seeking to extract savings of $7 billion (£4.7 billion) from the $50 billion all-share deal. He declined to comment on the report yesterday, telling the Charlotte Observer that the bank was in the “final stage of our analysis” for job reductions in its Merrill Lynch purchase.
Related Links
Nomura to cut up to 1,000 London jobs
Citigroup to cut another 52,000 employees
Most of the cuts are expected to come from Merrill Lynch, the world's biggest brokerage, which was forced to find a suitor in September as a way out of its funding crisis. John Thain, Merrill Lynch's chief executive, admitted in October that the deal would result in “thousands” of layoffs.
Yesterday, the Challenger Report, published by Challenger, Gray & Christmas, America's oldest outplacement firm, said that 91,000 jobs had been shed in the financial services sector in November, hitting a nine-year high.
It is the first snapshot of recent job losses at the banks and other financial companies since Monday's announcement that the economy has been in recession for a full year. The last time that job losses in the financial sector came close to November's figure was in March 1999, when 22,000 positions were lost amid the Russian and Asian crises. November's figures were a sharp increase on the 18,000 layoffs reported for October and the 7,000 cut in November last year. About 226,000 jobs have been lost in American financial services so far this year.
The growing fears over jobs came as the Federal Reserve's Beige Book report found that economic activity had weakened further in recent weeks.
The report, which will be used by the central bank's policymakers for their December meeting on interest rates, indicated a further decline in already grim economic conditions.
“Overall economic activity weakened across all Federal Reserve districts since the last report,” The Beige Book said. It noted weak consumer spending and that car sales were “down significantly” in most regions.Manufacturing declined and housing remained soft, due to “reduced selling prices and low, but stable, sales activity”.
The Beige Book, based on a survey of the 12 regional Federal Reserve banks, found few bright spots. Significantly, the report found credit conditions tightening, further constricting economy activity. “Lending contracted, with many districts reporting reductions in residential, commercial and industrial lending and tightening lending standards,” it said.
Courtesy: Times Online
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