In a major cost-cutting drive, J.P. Morgan Chase & Co. Cap Secs Ser K 5.875% (NYSE:JPM-K) is laying off more than 5,000 jobs by 2016. According to reports, the cuts have already started and around 1,000 jobs have been cut over the last one month. As the company is moving ahead with the expansion of the web and mobile banking platform, the bank has decided to shed off at least 2% of teller staff from its 5,570 branches.
Having advised its branches to use technology and refrain from using too many human tellers, Chairman and Chief Executive James Dimon said that every branch would lose on staff member by the 2016 end through attrition.
The headcount of the bank will not be affected by the layoff as the company appoints more than 40,000 employees every year. The cut in jobs is better than the one that happened in 2014, cutting over 7,900 mortgage jobs.
Dimon said that while, on an average, each bank may lose two tellers; a financial adviser would be added as the handling deposits become more electronic. Even as the amount of saving that the cost cutting initiative would be bringing in was not issued, a presentation in February 2015 had estimated a dip in expenditure. The dip was $57 billion in 2015 from $58.4 billion incurred in 2014.
As of March 31, a total of 241,145 employees has been laid off by J.P. Morgan in the past quarter that has seen a dip of 7.7% or 20,000 lesser employees have been laid off since Q12012.
Company sources said that cutting the costs was being done to help shed off the excess burden of the organization and adding more technology and operations employees. In the FY2015, J.P. Morgan is looking to expand in the automated technology sector with the help of speedier trading competency and new ATMs. The low-interest rates have been a major reason for the slow down in the banking sector as revenue growth is hard to achieve.
The regulatory and legal expenses have also seen a rise in recent years leaving banks with no other option than to cut costs.