Britain’s banks will be forced to continue to cut costs as they struggle to grow revenue amid tougher regulation, according to a report by KPMG LLP.
Higher regulatory expenses and a “struggle to grow top line revenues” mean banks are likely to continue their plans to reduce costs, the report said. “The next six months will remain challenging,” KPMG said.
The biggest global banks are cutting jobs at the fastest rate since 2008 as a weak U.S. economy squeezes revenue, regulators push firms to hold more capital and companies restructure businesses to improve profitability. Combined pretax profit for the first half of 2011 at Britain’s five biggest banks fell by almost half to 7.9 billion pounds ($13 billion) from a year-earlier as the lenders compensated customers mis-sold mortgage insurance and posted losses on sovereign debt holdings, KPMG said.
“Concerns about future revenue growth, global regulation and the final report from the Independent Commission on Banking are burdening the sector,” said David Sayer, global head of retail banking at KPMG. “Banks are looking closely at their business models to determine whether they are sustainable.”
HSBC Holdings Plc’s plan to shed 30,000 roles, unveiled by the London-based firm on Aug. 1, was the single biggest job-cutting announcement since Bank of America said in December 2008 that it would eliminate as many as 35,000 positions, according to company statements and data compiled by Bloomberg Industries.