Boston, MA 02/26/2014 (wallstreetpr) – JPMorgan Chase & Co (NYSE:JPM) plans to reduce its wage bill by about 8,000 jobs in the current fiscal year as the mortgage industry continue to grapple with increased challenges, uncertainty and reduction in refinancing. Job cuts have been the order of the day in the banking sector amidst economic hardship that is facing many customers making it difficult for them to buy homes.
JPMorgan and Chase to reduce wage bill by $2 billion
Bank of America Corporation (NYSE:BAC) and Wells Fargo & Company (NYSE:WFC) started the trimming earlier last year, as their mortgage sectors continued to be faced with massive challenges including increased legal cases on claims of possible fraudulent mortgage plans. JPMorgan &Chase had earlier initiated the job cuts by letting some of its employees know of termination of their contracts, as it plans to slash its $2 billion consumer banking expense before the end of 2016.
The new job cuts are set to mostly affect employees in the bank’s mortgage and retail banking business as part of last year cuts that affected over 16,500 employees. JPMorgan Chase & Co (NYSE:JPM) currently commands a total work force of about 251,000 of which the expected job cuts of about 8,000 will only affect 3% of its total labor force.
Higher interest the causing of the massive job cuts
The mortgage industry was initially a booming business as low interest rates caused many Americans to refinance homes causing massive employment in the mortgage sector of banks to cater for the processing of loans. This has not been the case in the recent past as interest rates have risen to levels that have pushed people away from refinancing causing lots of losses to the mortgage sector.
MR Gordon smith who runs JPMorgan Chase & Co (NYSE:JPM) consumer and banking business has pointed out lower volumes on mortgage refinancing in the first quarter as the reason behind the accelerated and increased job cuts. The officer is also of the opinion that the mortgage business of the bank is set to lose money during the current financial year something that might not get any better with a huge wage bill.
JPMorgan Chase & Co (NYSE:JPM) plans to reduce the size of its branches as many customers switch to online banking which has become a hit, an effect that may cause some branches to be flat in terms of operations.
