The continued impact of the sub-prime crisis will lead to US commercial banks shedding an unprecedented 200,000 jobs within the next 18 months, according to financial research group Celent.
This figure is a significant increase on the 153,000 job cuts across the financial services sector in 2007. However, unlike the 2007 figures Celent's research does not include securities firms, which have suffered some of the worst losses during the sub-prime crisis.
Octavio Marenzi, head of Celent's financial consultancy unit, said: "The banking industry over the past 40 years has never seen a downturn in its revenue growth. In 2008, it looks like it will decrease for the first time in living memory. They're going to have to respond with severe cost cutting. It's not an environment they're entirely used to."
Around 10 per cent of all jobs within the sector will be cut as banks strive to reduce costs in the face of heavy sub-prime losses and a decline in the housing market.
Many US banks have reported extensive writedowns as a result of the credit crunch, with Citigroup and Merrill Lynch reporting losses of $21.1billion and $22billion respectively. In response Citigroup has already revealed 20,000 job losses while its rivals have followed suit.
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