Bloomberg News

ANZ Bank to Cut 1,000 Jobs, Citing ‘Difficult Environment’

February 21, 2012

(Updates with National Australia rates move in third paragraph.)

Feb. 13 (Bloomberg) -- Australia & New Zealand Banking Group Ltd., the third-largest bank in Australia, plans to eliminate about 1,000 jobs and reiterated a pay freeze for most senior executives as it combats a slump in lending growth.

The domestic cuts will be made by Sept. 30 and will primarily involve middle-management, back-office and support staff, the Melbourne-based bank said in an e-mailed statement today. ANZ Bank currently employs 49,000 people globally, including about 24,000 in Australia, it said.

ANZ Bank joins Westpac Banking Corp. in confirming plans to reduce jobs as the nation’s lenders confront the weakest demand for home lending since 1977. The two banks, citing a surge in wholesale funding costs, raised on Feb. 10 their standard variable mortgage rates independently of the central bank, which left borrowing costs unchanged last week. Commonwealth Bank of Australia and National Australia Bank Ltd. increased their rates today.

“You’d expect banks to be very vigilant on costs in the current environment and to do whatever is needed to pull the cost lever very hard,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “The banks up until the crisis have had 15 years of stellar profit and revenue growth and during that period you would expect a bit of fat has been built into the system.”

Shares of ANZ Bank rose 1.6 percent to A$21.77 in Sydney. The benchmark S&P/ASX 200 stock index gained 0.9 percent. ANZ Bank is scheduled to publish on Feb. 17 a trading update for the three months ended Dec. 31.

Westpac Cuts

“A different and very difficult environment is now emerging for banks globally,” Philip Chronican, chief executive officer of ANZ Bank’s Australian business, said in today’s statement. “Just as we are seeing in other parts of the Australian economy, we are also having to adapt our business to the new conditions and become leaner, more agile and more customer-focused so we ensure the bank remains strong and can grow and invest for the future.”

As many as 400 people will lose their job at Westpac, Australia’s second-largest bank, with most of the positions affected to be from the Sydney-based lender’s head office and technology and operations divisions, spokeswoman Supreet Gosal said Feb. 2.

Peter Hanlon, Westpac’s acting head of Australian financial services, told the Australian newspaper on Feb. 2 that a slowdown in business and consumer activity is happening across the board. He said conditions are as bad as he’s seen them in his 30 years of banking, according to the newspaper.

Two-speed Economy

UBS AG forecast last month that Australian banks may eliminate 7,000 jobs in the next two years as they seek to pare labor costs that account for 58 percent of expenses.

Companies outside of Australia’s booming mining industry are struggling, and the so-called two-speed nature of the nation’s economy was reflected in the loss of 29,300 jobs in December, capping the worst year for employment since 1992.

ANZ Bank staff in Australia were told today of 492 roles affected by the reductions, the lender said in the statement.

“In this environment, the right thing to do is to be upfront with our staff and with the community about the changes needed in banking and their implications,” ANZ Bank’s Chronican said. “We are acutely conscious of the impact of these reductions on individual staff members and we will be making every effort to use natural attrition, to redeploy staff, and to utilize our training funds to support those people affected.”

‘No Justification’

Today’s job cut brings the number of finance industry reductions since the start of the year to 2,000, according to the Finance Sector Union, which represents some bank workers.

“There is no justification for any Australian bank to slash jobs,” Leon Carter, the union’s national secretary, told reporters in Melbourne today. Given their combined profit of more than A$24 billion ($25.7 billion) last year, “if anyone can afford to invest in Australian finance jobs it is our four big banks,” Carter said.

ANZ Bank will also continue to “constrain senior executive salary increases,” as part of a measure it announced last year, the bank said in today’s statement.

For “most senior executives, that means salaries will remain fixed for the 2012 financial year,” the bank said.

--With assistance from Michael Heath in Sydney. Editors: Malcolm Scott, James Gunsalus

To contact the reporters on this story: Jacob Greber in Sydney at jgreber@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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