An oft-repeated maxim in banking is that one cannot "cut to glory", But after yet another torrid year, European bosses have been left with little option but to slash tens of thousands more jobs to try to address their chronically poor profitability.
Hemmed in by the European Central Bank's long-term extension of negative rates, slowing economic growth, Brexit and burgeoning regulatory requirements, lenders across Germany, UK, France, Spain and Switzerland have collectively announced more than 60,000 jobs cuts this year.
For the top ten banks in Europe by market cap, staff numbers have fallen a fifth since 2008 to 1.1m. By contrast, the fall is roughly 7 per cent for the top ten in the US.
Many of these have come from the region's struggling investment banks, which are suffering from a general decline in the revenue pool as well as continued market share losses to US rivals.
Moody's, which this week changed its outlook for global banks to negative from stable, warns that the "profitability gap between euro-area banks and global peers will widen further" in the medium term despite the large headcount reductions.
"The costs of reducing overcapacity through restructuring . . . are front-loaded, while profitability gains will accrue over the longer term," its analysts warned in a report.
Cuts at Deutsche Bank have been the most severe. After its failed merger attempt with Commerzbank, chief executive Christian Sewing announced a retreat from investment banking over the summer, resulting in 18,000 job losses and the creation of a new "bad bank" to dispose of €288b of unwanted assets.
In France, Société Générale eliminated 1,600 roles at its securities and trading unit — about 8 per cent of the division's headcount — as part of a plan to save €500m in annual costs after concluding it could no longer generate an acceptable level of profitability.
BNP Paribas similarly said "extreme market conditions" had hit trading revenues, causing it to slash financial targets and pledge an extra €600m of cost cuts. It shut its proprietary trading arm, Opera, which struggled to turn a profit during its brief existence.
In the UK, HSBC's interim chief executive Noel Quinn, who is auditioning for the job after his predecessor was fired for a lack of decisiveness, is preparing a cost-cutting plan that will result in thousands of job losses.
One person working on the revamp said the combined effect of cost-cutting, the reduction of risk-weighted assets in the US and the sale of businesses such as the French retail bank could result in a much larger reduction to the bank's 238,000 headcount by the time the bulk of the overhaul is completed about two years from now.
Most recently, UniCredit said this week it planned to cut 8,000 jobs and close 500 branches to save €1b as chief executive Jean Pierre Mustier continues his overhaul of the Italian lender.
The next few years could bring even more pain for employees. Many of the region's top lenders are positioning themselves for a potential wave of consolidation that could be unleashed as Europe's politicians and regulators soften their opposition to a full banking union.
That would clear the way for cross-border mergers that would inevitably bring more "rightsizing" as overlaps are eliminated and digitisation continues to take work from humans, especially in retail divisions and branch networks.
Written by: Stephen Morris and David Crow in London
© Financial Times