Over 10,000 banking jobs to go: KPMG

(AAP) - As many as 10,000 jobs or eight per cent of the big five's workforce could be shed from the banking industry over the next 12 months as the major banks cut costs and shore up their balance sheets, global consulting firm KPMG says.

KPMG head of banking Andrew Dickinson said he expected around 2,000 jobs to be cut
from each of the five major banks over the coming year.
This follows announcements of significant restructuring programs by ANZ, Westpac and
Commonwealth recently.
The big five banks, Commonwealth Bank, Westpac, ANZ, National Australia Bank, and
the soon-to-be-taken-over St George, presently employ around 125,000 globally,
according to the Finance Sector Union.
"I would expect a couple of thousand per bank, so 10,000 would be my guess," Mr
Dickinson told journalists after unveiling the results of KPMG's 2008 performance
survey for Australia's largest financial institutions.
KPMG financial services partner Michelle Hinchliffe said the banks would spend $1
billion in 2008 on restructuring programs.
Westpac said it would spend $226 million on restructuring its business model and
changing banking and IT systems, while CBA said it would spend $377 million on
restructuring.
"In the future we can expect selective outsourcing to cut costs," Ms Hinchliffe said.
She said there was likely to be more sending of jobs offshore and job redeployment,
especially for back-office roles.
Over the past two weeks, all banks said they would focus on lowering their cost to
income ratios during their fiscal 2009.
The average cost to income ratio across the big banks now stands at 45.4 per cent,
down 0.9 per cent on the previous year, Ms Hinchliffe said.
Mr Dickinson said he expected Westpac to gain between 20 and 30 per cent extra
revenue in fiscal 2009 from its merger with St George Bank, and up to 40 per cent of
any cost reductions.
ANZ's costs jumped 10 per cent in its fiscal 2008 and expected to spend $100 million
on job cuts, a corporate restructure and process changes that would result in annual
costs being cut by $200 million from 2010, the bank said last week.
Suncorp-Metway Ltd chief executive John Mulcahy said redundancies at the
Brisbane-based banking and insurance company may lie ahead as it trims costs amid
what it expected to "significantly lower" GDP growth and household spending in
2009.
No target number for job cuts had been set but a hiring freeze was already in place,
Mr Mulcahy told media after addressing a business audience in Melbourne.
"(We) didn't want to employ people and have additional redundancies," he said.
"So our process is to try to make sure we use natural attrition and then also
redeploy people," he said.
"We could have some redundancies - we don't have any target head number. If we do
that, people will be treated in accordance with our values very fairly."
KPMG said Australian banks were generally in good shape with no systemic credit
problems in the sector.
However, further consolidation was on the horizon with a two-tier banking system
expected to emerge.
The big four banks would dominate, Mr Dickinson said.
The mid-tier players relied on wholesale funding and would fall by the wayside, he
said.
Mr Dickinson nominated Suncorp-Metway and Elders Rural as institutions likely to be
swallowed by their competitors.
Mr Mulcahy said Suncorp-Metway had completed its 2009 term funding program and would
be flexible regarding any further bids for its banking and wealth management arms.
Suncorp-Metway said it had no other approaches from interested buyers since talks
with two banks fizzled due to market volatility.
Suncorp-Metway rebuffed of a low-ball offer from another bank, believed to be ANZ.