At first glance, the news is not good for jobs in the banking industry. The biggest bank in the United States in terms of assets, Bank of America is to cut its staff numbers by 3500. They put this down to the global uncertainty in the financial sector and the fact that they are creaking under the weight of a problem loan portfolio in the region of $ 1 trillion. The bank is also trying to put their house in order to comply with the terms of the Volcker Rule.

This significant downsizing of banking jobs comes at a time when several banks around the world are looking to cut numbers; the 150 year old Swiss institution UBS, along with HSBC and RBS are laying off around 60,000 staff between them.

Closer to home, it is reported that there was a month-on-month drop in recruitment for the financial sector in the City of London of 10%, for the period of June to July 2011. That’s 18% down on last year. The number of new professionals entering the banking jobs market is also massively down by 44% from June, 14% down from the same time last year. This is not just happening in London, similar patterns are emerging in financial institutions across the globe. The big banks are concentrating on only recruiting the very best and retaining and promoting from within.

Improvement Ahead

The banks are obviously concerned over the financial turmoil we have witnessed recently but shouldn’t be too eager to lighten staff numbers. Things will improve despite what the media would have us believe. The major players in the big financial houses and treasury ministers won’t allow the whole house of cards to come tumbling down. The sort of brinkmanship we saw in the US, between Obama and the Tea Party Republicans, was played out as high drama but in the end it was farcical; they won’t bring down the world’s most influential economy just to score political points.

The Volcker Rule, intended as a measure to restrict own capital investment by banks and thus prevent a repeat of 2008, is so watered down it’s almost a publicity stunt to boost Obama’s waning popularity. Following considerable campaign donations by the likes of JP Morgan Chase and Goldman Sachs; Treasury Secretary Tim Geithner, former chief economist Larry Summers, and senior adviser Valerie Jarrett were always unlikely to bite the hand that fed them. In London, George Osborne is a friend of the banks and will do all he can to lighten the load of regulation.

The economy will bounce back, that is a given, as long as the major players don’t panic. The levels of recruitment into the financial sector will improve along with the economy. Banks shedding jobs will then have the expense of recruitment and training whereas the cannier institutions will be, right now, picking up the best of what has been recently cut loose and the best of those new to the jobs market.