eFinancialCareers

Scotland may have been left relatively unscathed by the credit crunch, but analysts advise financial services employees to watch their back (office).

Merrill Lynch has revealed that it is to axe 65 jobs in its Mortgages Plc division in Glasgow, and with other banks with back-office units in the city posting losses, could this herald more redundancies?

“I think generally there is a poor visibility at the moment in the markets, and while the majority of the cuts will come from the fixed income side, there’s no doubt that there will be some impact on the back-office staffing levels,” says Kinner Lakhani, banking analyst at ABN AMRO.

Peter Beaumont, deputy chief executive at Mortgages Plc, said: “Mortagages Plc, in common with most non-conforming lenders, has reduced its new business activities until such time as confidence is restored and the market resumes normal function once again.”

Merrill Lynch recently announced a US$8bn (£4bn) write-down on the back of the US sub-prime crisis – the biggest quarterly loss in the bank’s history. Morgan Stanley also has a large presence in Glasgow employing over 500 people in its operations division and 180 in its finance department, and it also has an IT operation in the city.

Glasgow employs 14,000 financial services professionals, mainly in the back office, and JPMorgan, Merrill Lynch, Morgan Stanley, Lloyds TSB, Barclays Capital, Aon and BNP Paribas all have outfits in Scotland’s biggest city.

Dick Bove, banking analyst at Punk Ziegel & Co, says: “Offshoring has been a big deal with these banks, to save costs. They’ve pushed these functions out of central offices and the cutbacks are going to occur in the areas where they’ve pushed the jobs to.”

Obviously, City types have been sweating on news about where the cuts will occur over the past couple of months, and most are expected within the structured credit departments, which have been largely responsible for the losses. However, cuts won’t necessarily appear in the most obvious places.

Lakhani cites the example of UBS, which announced 1,500 job cuts globally: “It has been suggested by UBS, though not implicitly stated, that although the majority of the cuts will come in the structured finance sectors, a percentage of the 1,500 job losses will come from back-office staff.”