Shrinking Valuations Drive Bank Payroll Cuts

[marmar]

(Bloomberg) Financial firms, shunned by investors to a degree seen only once in the last 20 years, are becoming a smaller part of the U.S. economy as they deal with a past that won’t go away and a future of lower revenue and fewer jobs.

Shares of financial companies have fallen for three straight months and now have their lowest ratio to the Standard & Poor’s 500 Index since 2009. Net revenue at the six largest U.S. lenders -- Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley -- will probably fall 3.7 percent in the second quarter, the fourth year-over-year decline in five quarters, according to 100 analyst estimates compiled by Bloomberg.

Persistent low interest rates and stagnant loan growth are shrinking interest income as new regulations curtail fee revenue from retail banking. Analysts, including Meredith Whitney and Nomura Holding Inc.’s Glenn Schorr, expect the slow growth to result in job cuts on Wall Street in the coming months.

“Without any change, the financial sector is definitely set to shrink,” said John Garvey, head of the financial industry advisory practice at PricewaterhouseCoopers LLP. “You don’t have to be a scientist to figure out that tighter regulation and more onerous capital rules without economic growth will shrink the industry. It has to.” ..............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-06-08/shrinking-bank-valuations-drive-pressure-for-payroll-cuts-to-buoy-profits.html

[Democrats_win]

1. Sadly, the people on top will still be taking home a boat-load of unearned income.

[SoCalDem]

2. Banking needs to go back to what it was..THREE parts

commercial
community
investment

that way each patron knew EXACTLY the type of bank they were dealing with and what to expect.