Tuesday, August 26, 2008

Cost Reduction Measures – Investment Banks – 2008

Globally financial firms have reduced head count by 1,01,250 since beginning of credit crunch.


Citigroup has cut about 14,000 jobs in the first half of 2008.
Citigroup is scaling down external training.
Purchases of computer hardware and software needs to be preapproved.
Blackberry buying requires preapproval.
All nonclient travel requires preapproval.
Off site meetings of employees cutback.
Colour copying limited to client presentations
Efficiency in spending is priority.

(According to contents of an internal memo published in the UK’s Daily Telegraph.)

Deutsche Bank

Business meas must not exceed 50 pounds per person ($92).
Dealmakers to get approval for taxi journeys in advance from their manager.
(According to Independent news paper)


UBS has made cost reduction program as a part of its new organization change initiative

Operating expenses

2nd Quater 08 vs 2nd Quarter 07:

Total operating expenses declined by 36%, falling to CHF 2,931 million from CHF 4,565 million.

A 56% decline in personnel expenses, to CHF 1,494 million, reflects lower accruals for performance-related compensation and an adjustment relating to changes to the forfeiture provisions of future equity ownership plan (EOP) awards. Salary costs also declined as personnel were reduced by 2,662 full-time equivalents.

General and administrative expense decreased by 17% to CHF 784 million, with reductions in a number of expense lines. The most notable reductions were in travel and entertainment, and IT and outsourcing, and are largely attributable to the ongoing cost reduction program.


Merrill Lynch

1st quarter 2008

Compensation Expenses
Compensation and benefits expenses were $4.2 billion for the first quarter of 2008, down 14 percent from $4.9 billion in the first quarter of 2007, due to a decline in compensation expense accruals reflecting lower net revenues.

The firm intends to reduce its headcount from year-end levels by approximately 4,000 employees, or 10 percent, excluding FAs and investment associates. Headcount reductions will be targeted in GMI and support areas, and will not impact the firm's financial advisor or investment associate population. Cost savings from this reduction are expected to be approximately $800 million on an annualized basis, including approximately $600 million for the remainder of 2008. As a result, the firm expects to record a restructuring charge of approximately $350 million in the 2008 second quarter.


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