Fears axe could swing on 5000 bank jobs

ANZ Banking Group has launched its first round of job cuts in Australia. File photo

ANZ Banking Group has launched its first round of job cuts amid fears that up to 5000 jobs could disappear from Australia's big banks in two years.

Analysts believe most of the industry-wide cuts will result from natural attrition rather than redundancies.

But ANZ will be the exception, slashing about 1000 jobs over the next six months as a quick fix, designed to relieve pressure from analysts and investors about the bank's burgeoning cost base.

ANZ on Tuesday told 130 staff that their jobs will be axed.

A spokesman for the bank has said there are no plans to reduce staff in New Zealand.

The Victorian back office roles to go span ANZ's retail, business banking and SME operations, a spokesman said.

ANZ will cut a maximum two per cent of its 49,000-strong workforce, giving it a three per cent lift in earnings per share (EPS), Bell Potter Securities analyst TS Lim said.

"The Australian retail and business operations are already pretty efficient, so there's no way you're going to have massive (job) reductions there,'' he said.

He expects ANZ to cut around 350 jobs from its Institutional Banking division, and another 340 jobs from its group corporate centre, both of which employ mostly non-union executives.

Mr Lim's comments came after UBS said up to 7,000 jobs could be cut from the big four's 179,000-strong workforce.

Recent redundancies at Merrill Lynch, Morgan Stanley and Royal Bank of Scotland point to subdued activity within capital markets, Fat Prophets analyst Greg Fraser said.

"You'd expect that to be echoed across retail banks.''

In a commentary on banks' costs repeated from a UBS report in June, banking analyst Jonathan Mott said he expects the combined headcount to fall to 172,000 in two years.

ANZ's move will give chief executive Mike Smith relief from investors worried at the bank's surging costs racked up from its expansion in Asia and markets trading business.

Last year ANZ was the only bank to report 'negative jaws', a measure of the difference between cost growth and revenue growth.

Mr Lim said a two per cent reduction in the bank's headcount will deliver positive jaws so that revenue growth outpaces cost growth.

"This is a quick and easy win for (Mike Smith) to bump up jaws.''

ANZ's rivals trimmed their workforces through natural attrition in 2011, and analysts expect this to continue given staff turnover rates of 10 per cent.

Mr Lim expects Commonwealth Bank (CBA) and Westpac to reduce their headcount by about three per cent, and National Australia Bank (NAB) by two per cent.

This would see the big four's combined 179,000 workforce reduced by up to three per cent, or about 5000 roles.

UBS estimates that every one per cent cut in staff numbers delivers a 0.7 per cent rise in EPS for banks, and a one per cent lift in revenue drives a 2.1 per cent increase in EPS.

So a three per cent drop in staff numbers could boost the big four's combined cash profit by $500 million.

Westpac said it would reduce its 37,712-strong workforce in 2012, but has no target numbers.

The bank is initially targeting reductions in head office, contracting and IT roles, and would increase staff numbers in other areas, spokesman Paul Marriage said.

CBA and NAB said they had no target or plans for major staff reductions.

- AAP