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The Downside of Expense Management? Revenue.: Banks hit hard by writedowns are desperate for ways to shore up their financials. Aggressive management of expenses is first on the to-do list. But it often comes at the expense of profits.
- Article from:
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US Banker
- Article date:
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June 1, 2008
- Author:
- Sraeel, Holly
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Its a predictable outcome in the wake of the credit crisis. When the going gets tough, institutions start cutting expenses, particularly in headcount. In the past nine months, tens of thousands of jobs in financial services have been earmarked for elimination. Citigroup plans to do away with an estimated 30,000 jobs; Merrill Lynch will cut 4,000; UBS plans to slash 5,500; and Washington Mutual will part with 3,000. Even JPMorgan Chase, labeled by some as bankings white knight, has announced that it could cut as many as 4,000 positions.
This reaction is not uncommon during economic downturns, but it could lead to bigger problems for institutions down the road. Banks hit ...