Up to 50,000 employees with ties to the U.S. securities industry could lose their jobs in 2011, according to analyst Meredith Whitney. Should she be right, the job losses could total 5 to 10 per cent of the entire industry.
Ms. Whitney made the claim in a report called “Coal in Stockings and Pink Slips for New Year's.” The Wall Street Journal had access to the file and highlighted some of the details here.
Her explanation is well-reasoned (though it may not necessarily prove to be correct). Ms. Whitney said underwriting and advisory fees account for around 80 per cent of investment banks’ revenues and those areas have suffered badly. Moreover, consumers are deleveraging and Ms. Whitney said there is evidence that banks are doing the same in response.
But she did add that banks with global exposure, particularly to emerging markets, should fare better. However, that doesn’t bode well for U.S. behemoths like Bank of America, which has an 82 per cent exposure to the U.S.
For those unfamiliar with her name, Ms. Whitney is well regarded because of her big call in 2007 that Citigroup needed more capital.
