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Finance

What do job cuts in European banks mean for India

The Washington Post today reported the following about Credit Suisse, the Swiss investment bank –

Credit Suisse <CSGN.VX> will cut another 1,500 jobs and scale back its capital-guzzling investment banking business as it seeks to meet tough new regulations, it said on Tuesday after reporting disappointing third-quarter results.

Nomura , the Japanese investment bank maybe cutting twice the number of jobs as compared to its Swiss competitor –

Japan’s Nomura Holdings <8604.T> posted its first quarterly loss in 2-1/2 years on Tuesday due to a sharp drop in investment banking revenues and tripled its cost-cutting target to $1.2 billion in a setback to its overseas expansion plans.The debt crisis in Europe has ratcheted up pressure on Japan’s top brokerage to tap the brakes on a global expansion that started with its purchase of the Asian and European businesses of failed Wall Street bank Lehman Brothers in 2008.Nomura lifted a cost-cutting target to $1.2 billion from the $400 million announced in July in a move that will likely lead to hundreds of more job cuts on top of the roughly 400 it set out to reduce in September.While Nomura did not give details of planned job cuts, its chief financial officer, Junko Nakagawa, said 60 percent of its cost savings would come from Europe, where it is losing money and has 4,500 workers, or about 13 percent of its total staff.

While these job cuts really may mean not much to the average Indian, these signify changing winds in the global market, something that has started since the fall of Lehman in 2008. Firstly, these signify tumultuous times in the European markets, with the economies floundering under the impact of potential bankruptcy of governments.

Secondly one has to understand that European job cuts will impact in certain ways the backend support ops as well. Possibly some job transfer to India may happen as well.

Thirdly, if job cuts are happening in Europe now, will a similar situation happen in India in future? And if Yes, how is the country going to guard against it? Thats also something that needs to be considered.

What do you think on this? Let us know.

 

 

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