After the financial crisis ended in 2009, things started looking up for major banks. Their earnings improved, and their stocks appreciated.
But the picture isn’t so pretty anymore, with the economic recovery losing steam and woes from the credit crisis weighing on bank earnings again.
“People heard all these things before, but the reality of seeing the numbers is finally sinking in,” John Chrin, a former JPMorgan Chase investment banker, tells The New York Times.
“It’s hard to imagine big institutions achieving their pre-crisis profitability levels, and even the community and regional banks are faced with the same problems.”
A few months ago, some big banks brought on more staff, but now they are cutting workers – tens of thousands in total, The Times reports.
UBS is dumping 3,500 employees, or 5 percent of its headcount. Bank of America may shed up to 10,000 workers, or 3.5 percent of its staff.
Citigroup, ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo also are slimming down.
Not everyone is bearish on banks, though. Star analyst Dick Bove says now is the time to buy their shares.
“In the last few days, I started looking at valuations of these companies and was just shocked by what I saw,” he tells CNBC. “These stocks are selling in many cases at lower valuations than the first quarter of 2009, which was supposedly the bottom."
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