Banks Move More and More Operations to Mid-Sized Cities

Friday, 14 Dec 2012 09:48 AM

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Banks are moving more and more operations away from New York to mid-sized cities like St. Louis, thanks to lower wages and tax incentives, according to The Wall Street Journal.

St. Louis saw securities-industry employment rise by 85 percent between January 2007 and September 2012 to 12,190 positions, The Journal reported, citing data from Moody’s Analytics.

New York, meanwhile, lost 9 percent of its securities, commodities, asset-management and fiduciary-trust jobs over the same period, leaving the city with 195,000 positions.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

Charlotte, N.C., another noted banking hub, lost 24 percent of these types of jobs during the last five years.

Salaries played a big role in the move to smaller cities, with the average annual wage for securities-industry positions in St. Louis coming to $102,000, well below the $343,000 in New York City.

Other cities seeing more securities-industry payrolls these days include Columbus, Ohio; Des Moines, Iowa; Pittsburgh; Austin, Texas; Boulder, Colo.; Wilmington, Del.; and Salt Lake City, the data show.

“I have been on more flights into New York to talk to companies in the last year than I have in the last five years,” Deloitte Consulting’s Darin Buelow, who helps Wall Street firms evaluate alternative locations, told The Journal.

Some noted banking analysts have said financial institutions should consider leaving New York, especially in light of high-level lawsuits constantly slapped on the sector.

New York Attorney General Eric Schneiderman recently filed a civil fraud lawsuit against JPMorgan Chase concerning securities sold by Bear Stearns, which JPMorgan bought in 2008.

The lawsuit claims that Bear Stearns failed to ensure the quality of loans forming part of mortgage-backed securities it sold in 2006 and 2007.

Schneiderman took similar action against Credit Suisse Group as well.

Other financial institutions have been subject to a slew of other high-profile lawsuits in the past, including under former New York Attorney General Eliot Spitzer.

“Management should consider the benefits of moving their headquarters elsewhere. Shareholders should not be forced to pay for continuous lawsuits because these banks are in New York,” Dick Bove, a banking analyst from Rochdale Securities, wrote in a note to clients, according to the Charlotte Observer in October.

“If the industry was located in Charlotte, N.C., it would not be facing constant hostility it would be supported by a government that wants its business.”

Other states play host to many industries and work to keep them there, not punish them.

“I am constantly struck by the fact that Michigan does not sue the auto industry; Texas is not suing the oil industry; California is not suing the entertainment industry; and Florida is not suing the tourism industry,” Bove wrote, CNBC reported separately.

“They do not sue farmers in Iowa. New York never stops suing the financial industry. Why? What do these other states understand that New York does not?”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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