Merger wave threatens thousands of banking jobs
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Your support makes all the difference.Speculation that UK banking could be in for a major shake-out reached fever pitch yesterday with confirmation of a multi-billion pound deal between two Swiss banking giants. Lea Paterson reports.
The City was predicting last night that a link-up between Barclays and NatWest, with the loss of thousands of UK jobs, could be one consequence of the Swiss bank merger.
The Union Bank of Switzerland (UBS) and the Swiss Bank Corporation (SBC) confirmed that they were to join forces, creating the world's second- largest bank.
The 3,000 redundancies said to be on the cards in the City were more than had been expected. Highly paid traders, whose annual bonuses can top pounds 1m, will be among the casualties, as will employees in both IT and finance.
UBS and SBC's decision to merge was prompted by a wave of mergers in the world of investment banking. "Mega-deals" this summer between a number of US banking giants has led many in the industry to believe that big truly is beautiful.
"The worldwide wave of consolidation in the financial services industry has made size an increasingly critical factor for any financial services provider with ambitions to be among the most successful players worldwide", said the Swiss banks , explaining their decision to link up.
Industry experts were predicting that the SBC/UBS deal was by no means the last, and eyes turned to British banks NatWest and Barclays, whose shares soared yesterday on speculation they could announce merger plans.
Both NatWest and Barclays recently admitted they were unable to become global banking giants, and sold off large parts of their investment banking operations at bargain basement prices. City commentators predict a merger could throw a financial lifeline to the two embattled banks. But any link- up between the two High Street giants would be at the cost of thousands of jobs.
The UK's competition authorities could prove the one obstacle to a link- up between NatWest and Barclays, which are understood to have had informal merger talks. However, legal experts said it was "unlikely but not out of the question" that the two banks could be given the green light.
Though staff in branches at leading UK retail banks often struggle to move jobs following waves of cutbacks and reorganisations, employment difficulties have yet to hit the glamorous investment banking sector. Investment banks create hundreds of instant millionaires each year during their lucrative bonus season, scheduled to start this week.
But recruitment specialists warned that, if the mergers continue, this year's "bonus bonanza" could be the last.
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