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Banks Seen Shrinking for Good as Layoffs Near 160,000

Major banks have announced some 160,000 job cuts since early last year and with more layoffs to come as the industry restructures, many will leave the shrinking sector for good as redundancies outpace new hires by roughly two-to-one.

As banks shrink, fewer of those leaving are able to find equivalent jobs at rivals, head-hunters and bankers said, and only a small proportion of those are qualified to move into other jobs at hedge funds, for instance, which look for specialized, skilled traders.

Mergers and acquisition deal-makers are now also coming under pressure, with fees in that area down 21 percent worldwide to $13.9 billion in the first nine months, Thomson Reuters data showed.

More senior investment bankers are among those in the line of fire. Those ranking as managing directors (MDs), who can command base salaries of around 350,000 pounds ($556,000), are becoming costly to keep - and difficult to take on.

"At MD level, it is tougher to accept smaller jobs, and they do not have the same drive and ambition as the young bankers who have just graduated," Ebrahim from the Kennedy Group said.

Many of those that have enjoyed lucrative careers in the fatter years are instead leaving big banks for good, setting up their own small consultancies or different types of businesses.

Copyright 2012 by Reuters. All rights reserved.

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