More Bank Job Cuts on Way as "Game's Up"

Credit Suisse is rumored to be the latest major bank set to announce large job cuts, and it is unlikely to be the last, Peter Toogood, head of investment at Old Broad Street Research, told CNBC Tuesday. “The game’s up. There’s no transactions, M&A isn’t happening, this is what deleveraging looks like. It’s a decade of austerity and that makes people feel more unlucky,” he said.

“Investment banks are going to struggle. There’s not going to be mass lending going on. The leverage game is over and people can’t accept it. Volumes are declining en masse and their headcounts are too high.” Trading volumes have declined overall since March 2009, with falls in U.S. stock trading volumes in each month this year. In April, there were 6.5 billion trades on average per day, compared with 12.1 billion at the market’s height in 2008. Both the New York Stock Exchange and Nasdaq reported that trading fell in the first quarter of 2012.

Lending has also shrunk, both because of worries about bank capitalization and because of reluctance to borrow money on the part of companies. When acquisitions happen, they are often based on cash rather than leverage, which means that banks have a smaller size of the pie. Moody’s mass downgrade of the world’s biggest investment banks last week showed the increasing worries about the sector. Read more >>