The largest international banks will be firing employees at the quickest rate since 2008. The cuts are due to the weak U.S. economy, government demands that companies hold more cash reserves, and company reorganizations to increase income.
The 50 biggest banks have been planning since January to reduce 60,000 through July which would equal 100,000 jobs by year end. HSBC alone plans to drop 30,000 jobs. In addition Bank of America Corp and Credit Suisse Group AG plan for combined layoffs of another 30,000.
International bank regulators are attempting to strengthen the solvency of the banks by demanding that the banks hold larger cash reserves. In addition, U.S. banks have been working against low loan growth and low interest rates which will limit their earnings. Many banks are also trying to withdraw investments from countries that are financially depressed and reinvest in faster growing countries such as India, Brazil and China.
Cutting jobs will increase unemployment and government funds needed to support these people. Unemployment is over 9% with another approximate 6% people who have given up looking for jobs and another 3% under-employed. This unemployment is another major drain on the economy indicating another strain that will drag America down over the short to midterm future.