The lay offs have already begun as banks look to bring their costs down and protect their profitability. UBS were the latest to cut 2000 jobs and they will not be the last as the crisis begins to bite hard and as usual the finance industry is reactive in
chasing the market down. I can however; guarantee that once the good times roll the banks will chase the market up. This is another kind of boom/bust that regularly costs the finance industry billions worldwide as the cost of redundancy is outweighed by the
cost of recruitment.
The recently published
2008 Corporate Actions report has uncovered the dearth of experienced employees within the finance sector. The report also describes the huge risks banks are taking by employing inexperienced temporary staff to plug holes in the operations. Enormous pressure
is put on too few knowledgeable senior people to ensure operational efficiency in the corporate actions department. The results are errors being absorbed into operational costs leaving the situation going unabated.
To train staff in corporate actions should be a long standing project with the objective of producing highly competent staff who understand all facets of corporate actions including, from the wider industry perspective. Unfortunately because of the complexities
within corporate actions it will take some years to achieve. Will the banks give them the time?
It is clear that the securities industry fluctuates as markets rise and fall but the financial services firms need to provide a baseline service that is never to far away from the market in both good and bad times.
Financial institutions within the market need to evaluate their compensation packages that allow for staff retention when the markets are not good that bring forth benefits when good markets return. The benefits of operating a more stable policy for employees
will be huge for the firm, breeding staff loyalty, increasing the quality of staff, improving the working environment and improving client services and efficiency. The firm will also reduce recruitment costs and those of redundancy. The current boom /bust
in recruitment actually threaten the banks if they only knew it.