Following last year’s realization that mortgage origination as a product line is effectively dead (which has forced such origination dependent banks as Wells Fargo to return to subprime lending in hopes of keeping the revenue stream alive, knowing full well how it all ends), and that only investors and “all cash” buyers are keeping the myth of the housing recovery alive on their shoulders, banks fired tens of thousands of workers in the mortgage business hoping to stem the bottom line bleeding from the collapse in revenues. It turns out that they didn’t fire enough and/or that the housing market contraction was far worse than even the banks, in their most, pessimistic forecasts, had expected. Case in point: JPMorgan, which after firing 15,000 in its mortgage business, has just revealed it will fire thousands more.
Several thousand more cuts are planned, according to people familiar with the matter, and could be announced at JPMorgan’s annual investor day on Tuesday. They are part of a new efficiency drive at the largest US bank by assets that also encompasses staffing branches with fewer employees.
Profitability at JPMorgan remains stronger than at competitors such as Bank of America and Citigroup but the bank is looking to find new savings, partly because of technology that allows greater automation of clerical functions in branches and partly because of a plunge in demand for mortgage refinancings.
Rising interest rates have stifled demand, causing the biggest banks to cut tens of thousands of positions over the past two years. The additional cuts at JPMorgan are expected to number more than 2,
The bank, which employs more than 250,000 people, is also looking to cut thousands of jobs in branches over time, though it expects to do so by attrition.
JPMorgan executives decided in the past 12 months to halt its branch-building programme, following a trend for banks to look online for future growth rather than to bricks and mortar.
