Fresh fears of a cull of City jobs grew today when IG Group said it would cut 10% of its workforce.
For the leading spread betting house that is 300 roles. Replicated across a City workforce of 587,000, that would mean towards 60,000jobs lost.
Some of the big banks such as Goldman Sachs have already made cuts, so may not repeat them, but the IG news caused a shiver of fear in theSquare Mile about what could be coming.
IG said the job losses would help save £50 million a year. It called the move “measures to simplify and streamline the business, better positioningit for further growth”.
Charlie Rozes, acting CEO since July, said: “We want to position IG Group as a lean fintech company and today's decisive actions ensure a strong platform forfuture growth.”
Nearly all trading houses have seen revenues plunge this year. A pandemic inspired boom as a new breed of investor spent lockdown savings on the stock market has long since tailed away.
Brokers at Jefferies said of the IG news: “Creating a ‘leaner, more agile business’ may be a reaction to the persistently softer market conditions IG and its peers are experiencing, after the boom during the pandemic.”
IG shares rose 22p to 661p today, which leaves the business valued at £2.6 billion.
The stock is down 17% this year.
Brooks Macdonald, the wealth manager based in the heart of the City on Lombard Street, also announced today that it will cut 55 jobs out of 512 – also about 10% of the total workforce.
Andrew Shepherd, CEO of Brooks Macdonald, said: “As an ambitious business, we must respond to evolving market dynamics by taking difficult decisions that will regrettably affect some of our colleagues, but make the Group stronger. Our Guiding Principles demand both that wetackle hard decisions head on, and that we care for and support our employees, and this will inform how we conduct the process.”
While job losses will save money for City firms, they are a hit to government finances, since they are likely to be held by well paid peoplewho pay a lot of tax to the Exchequer.
It is also an issue for the economy as a whole, since financial services is 10% of UK GDP.
The news comes on the day bankers saw the decade long cap on their bonuses, imposed by the EU, lifted.
Some bankers fear they won’t get any bonus this year, however.
It has been a slow year for new stock market listings and fund raisings.
Figures from EY show City floats have raised just £953 million this year across 23 companies. Just five firms picked the London Stock Exchange to float on between June and August.
This has slashed fees to the investment banks.
There were signs of a pick-up in activity lately as clients grew in confidence and felt inflation and interest rates were becoming predictable.
That may have been dashed by the conflict in Israel.
