Growing fears of a mass City jobs cull rose today when spread betting house CMC Markets said it would axe 200 jobs -- 17% of its headcount. Replicated across the Square Mile that would be tens of thousands of jobs.
Already big American banks have announced thousands of job losses as a dearth of deal making slashes revenues on Wall Street and in the Square Mile.
One estimate last week put it at 60,000 job cuts in 2023, one of the worst years of cuts since the 2008 financial crash.
CMC in particular has been buffeted by investors becoming shy of the stock market. With interest rates higher, returns can be made is much less risky ways.
A statement to the stock market today said:
"In its interim results announcement on 16 November 2023, CMC indicated that the business was reaching the peak of its investment cycle and a cost review was planned for H2 focused on driving efficiency through its global operations. The review has been successfully completed and as a result the Group will be reducing global headcount by approximately 200 positions, representing circa 17% of existing headcount. "
CMC, founded by Tory donor and Boris Johnson backer Lord Peter Cruddas, expects £21 million of savings from the cuts, though there will be a cost of £2.5 million initially.
Larger banks, including Deutsche, have already announced similar cuts. Last week Deutsche Bank said it would cut 3,500 jobs after a 30% drop in fourth quarter profits.
The strife has not gone unnoticed in the levels of government, where Chancellor Jeremy Hunt has sought reassurance that banks will be able to keep lending to businesses large and small to help the UK avoid a recession.
Banks and trading houses have been hit by a lack of deals and lower trading by investors,.
CMC said: "Cost reductions have been primarily achieved by merging support functions across multiple business lines, streamlining reporting lines and automating processes. The Group will continue to seek opportunities to drive efficiencies and control costs while remaining committed to investing in growth opportunities and ensuring its technology remains market leading."
Shares in City firms were under pressure today.
Lloyds Banking Group, held by many thousands of small investors, fell 2% to 41p. Barclays was off 1% to 148p. NatWest, in which the government is hoping to sell its 34% stake, fell 1% to 219p.
CMC shares are down nearly 40% this year as new clients who emerged during Covid drifted away from trading. The stock rose 13% to 150p today leaving the business, in which Cruddas remains the largest shareholder, worth £425 million.
The firm made a loss of £2 million in the six months to September, down from a £37 million profit the year before. It has been moving away from spread betting into more traditional
In November, UBS said it had culled 13,000 jobs following its merger with troubled rival Credit Suisse, leaving a total headcount of 116,000.
Since Covid, finance firms have tried to offer a different approach to normal hiring policies –booming when times are good then hacking back when they are not.
This year saw the end of that largesse. In October, the government ditched the bankers’ bonus cap that limited pay outs to twice their annual salary.
Ironically, this year saw many bankers see bonuses cut to zero in any case due to a sluggish market that has seen few new major floats on the stock market.
