Australian bank inquiry could cut 8% of the country's finance jobs

Massive job cuts may be tantamount to losses seen during the 2008 global financial crisis.

Bloomberg reports that the landmark probe by Australia’s Royal Commission into industry malpractice at the country’s financial sector may result in job cuts equivalent to massive losses witnessed during the 2008 global financial crisis.

“The finance and real estate sectors now represent 12 percent of gross domestic product,” said Auld, head of fixed-income and currency strategy for Australia at JPMorgan. “So some consolidation seems likely. We think employment in these industries could contract by 8 percent from peak to trough.”

Australian banks are facing tighter scrutiny after a probe by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has revealed a decade of corporate wrongdoing by the country's largest lendrs which range from lying to regulators, falsification of documents, taking bribes and extracting fees from dead customers.

Also read: Scrutiny over Australian banks' wrongdoing spill over to New Zealand

Major Eastern states like New South Wales and Victoria are more highly leveraged to the finance and real estate sectors. The industries respectively account for 7% and 5% of total employment in each state.

Also read: ANZ scraps financial planner bonuses amidst ongoing probe

“We would caution that the macroeconomic impact may take some time to reveal itself,” Auld said. “This means that a lack of evidence that the Royal Commission and greater regulatory scrutiny were having a macro impact thus far should not provide a false sense of security.”

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