Monday 5 February 2001

'Mergers to take toll of 300,000 financial jobs' By Gordon Martin in Geneva

ABOUT 300,000 people could lose their jobs over the period 1999 to 2002 as a result of mergers in financial services, according to a report on the sector. The Geneva-based International Labour Organisation (ILO) adds that further mergers and acquisitions are inevitable owing to increased competition but urged bank chiefs to ensure that staff were better informed. Its findings emerge as Lloyds TSB attempts to woo Abbey National into a friendly merger with the loss of 9,000 jobs over four years. The ILO also estimates that British banks shed 150,000 jobs and shut a quarter of their branches between 1990 and 2000.

The report believes that if mergers are primarily cost-cutting exercises then the impact on consumers is likely to be a lowering in the quantity and quality of services. It claims that many financial institutions may have seriously jeopardised their operational capacities, destroying rather than creating shareholder value, in their drive to cut costs.

It believes that there is no automatic link between size and profitability and that the complexity of managing large operations can nullify the benefits. The report claims: "Erosion in profitability could push the institutions towards further cost reductions, and a vicious circle of erosion followed by job cuts, with no end in sight."

Author John Sendanyoye believes that over half of all mergers fail to achieve their objectives because staff are neglected. The report says: "Neglect of the human factors is a frequent cause of failure. Two-thirds of mergers and acquisitions fail to achieve their objectives despite the often massive job losses and organisational restructuring they entail. The human factor is taken into account in only five per cent of mergers and acquisitions in all sectors."

http://www.telegraph.co.uk/et?ac=000446462942768&rtmo=r9har9QX&atmo=99999999&pg=/et/01/2/5/cnmerg05.html

-- Martin Thompson (mthom1927@aol.com), February 05, 2001