Australia’s big banks focus on job cuts as inquiry looms
SYDNEY: Australia’s big banks are responding to a revenue crunch by cutting jobs and other costs, prompting fears on the eve of an inquiry into their businesses that the industry’s tarnished reputation is about to take another hit.
Regulators’ demands that banks hold more capital and their scrutiny into internal operations have made cost-cuts the in-vogue metric at the so-called Big Four banks, Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, to boost profits.
But the strategic change will come at a cost for the banks.
“If you can be the most successful at bringing your staff numbers down the quickest, that’s going to give you the quickest cost advantage,” said one senior bank insider with direct knowledge of the cost-cutting strategy.
But, added the insider, who requested anonymity because he was not authorised to speak to the media, as jobs cuts mount, “society and the community will push back, won’t accept it.” Cost cuts are not limited to jobs, with banks preparing to make use of improved technology to reengineer back office functions, and reduce the number and physical size of their branches.
But the insider said he expected the Big Four to shed up to 40,000 jobs over five years as part of that overhaul, making a reduced wages bill the primary saving.
The focus on costs coincides with the start of a royal commission looking into misconduct in the financial sector starting Monday.
Scandals that have shaken public confidence include allegations of interest rate rigging, claims of a toxic trading room culture within some banks, and accusations that some institutions withheld legitimate health insurance payouts and gave misleading financial advice.
The inquiry, expected to last a year and which can recommend criminal charges and legislative changes, could potentially result in restrictions that affect bank profits, similar to a government-imposed bank tax levied last year.