Big US banks slashed 8,000 more jobs before tax-cut windfall

America's biggest banks just spent a week regaling shareholders about brighter days ahead, when tax cuts add billions of dollars to the firms' annual profits. About 8,000 people are getting left behind.

The nation's six largest banks shrank their combined workforce at the fastest pace in two years during the final quarter of 2017, according to figures disclosed in earnings reports since Friday. Citigroup Inc. and Wells Fargo & Co. eliminated the most positions, while JPMorgan Chase & Co. and Goldman Sachs Group Inc. added some.

Note: Figures reflect change in combined headcount at Bank of America, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo. The staff reductions occurred as Republicans and President Donald Trump's White House finished a tax overhaul that will benefit banks more than most other industries. While some of the six top firms said they may dole out special bonuses to staff or boost minimum wages, most emphasized that shareholders will be the main recipients of the windfall. The six firms have shed almost 150,000 jobs since the high-water mark in 2011. That amounts to a 12 percent cut as banks have sold off some units and look to automate more roles.

The banking sector has been the center of focus as the government mulls a mega foreign direct investment (FDI) push in the sector, weighs options to allow 100 percent FDI in private banks and 49 percent FDI in public sector undertaking (PSU) banks. In an interview with CNBC-TV18, Suresh Ganapathy, Banking Analyst at Macquarie Capital Securities shared his take on the likely impact. The banking sector has been the center of focus as the government mulls a mega foreign direct investment (FDI) push in the sector, weighs options to allow 100 percent FDI in private banks and 49 percent FDI in public sector undertaking (PSU) banks. In our analysis whatever capital PSU banks are likely to get from the government barely suffices the provisioning requirements and basel III requirements, he said. We have recently upgraded only State Bank of India (SBI) because of the fact that they are the only ones which are very well capitalised and they might land up getting growth capital, he added.

Speaking about non-banking financial companies (NBFCs), he said that there is correlation between rising rates and NBFC performance that is there compared to that in case of private sector banks, so if rates were to rise, clearly this stock performance in the near-term tends to be a bit more weaker, that is going to happen in the near-term, in the next three-six months, said Ganapathy.