On both sides of the Atlantic, bankers are hearing a loud, repetitive noise: chop, chop, chop. The latest headcount reduction comes courtesy of JPMorgan. It looks dramatic: 17,000 jobs, or 6.5 per cent of the bank’s staff at the end 2012. Most of that – 13,000 to 15,000 bodies and about $3bn of savings – will be in mortgage banking, largely staff that have been busy resolving the heaps of troubled mortgages that piled up after the US housing bust. Several years on, that pile is diminishing. JPMorgan’s inventory of loans to borrowers seeking modifications, for example, fell 27 per cent last year.
The remaining cuts are elsewhere in consumer banking. JPMorgan is increasing staff at its commercial bank and asset management arms. No cuts were seen at the investment bank, where JPMorgan holds the top spot in terms of global revenues.
JPMorgan is not alone. Bank of America, which picked up Countrywide and its soured mortgages, had added 40,000 jobs to manage legacy mortgage debt, which reached peak staffing of 58,700 last year. It spends about $3bn quarterly on servicing legacy mortgages from the past decade; it wants to reduce that to $500m. In the fourth quarter of last year alone, BofA cut 9,000 employees and contractors in its legacy assets group. BofA has not given future targets for job cuts in this area but they would be in addition to the 30,000 in cuts and $8bn of savings it announced back in 2011 to streamline after buying Countrywide and Merrill Lynch.