by: Scott Murdoch From: The Australian April 27, 2012
MACQUARIE Group has sacked more than 1300 staff in a bid to cut costs across the board after revealing a 2012 profit of $730 million, in one of the bank's worst performances since the peak of the global financial crisis.
The full-year result was down 24 per cent after its major businesses - the high profile securities trading and investment banking divisions were hit by the current global market slowdown.
The majority of the 1300 jobs lost were from Australian-based operations, with only a small percentage coming from the international businesses.
The job cuts came despite chief executive Nicholas Moore earning $7.78 million in the past financial year.
The bank’s annual report, also published today, showed Mr Moore took a pay cut from the $8.69 million he earned last year.
Macquarie’s head of funds group Shemara Wikramanayake was the second highest paid executive with a $7.36 million salary ahead of the $7.26 million earned by Andrew Downe, head of fixed income, currencies and commodities.
The bank had flagged its earnings would fall sharply after one of it slowest first halves on record. The second half profit of $425 million was boosted by a one-off dividend of $295 million from its stake in MAp, the former Macquarie Airports group.
The Macquarie board approved a 75c final dividend, unfranked, which took the total dividend down to 40c per share from $1.86 in 2011.
Macquarie's deputy managing director Greg Ward said the bank's reduced bottom line was the result of subdued global market conditions.
"Our earnings are down 24 per cent and that is pretty much what we are going on overseas in the industry across the equivalent period," Mr Ward said.
"The market conditions have made it pretty tough ... be that in broking or equity capital markets. There is subdued levels of activity on the institutional and retail side.
"There are two business, Macquarie Securities and Macquarie Capital, which are the major drivers behind the fall in profitability."
Mr Ward said the current market volatility made it difficult to forecast the future financial performance of the investment bank.
"So many of our businesses are dependent on the overseas markets," he said.
"There's so many factors that feed into investor confidence. We have a sense that things are quite depressed and there is still a lot of reason for caution.
"We are cautious in what we are trying to do. But in the medium term we are positive about our businesses which is why we are continuing to grow them in particular way."
The bank also revealed today its global workforce had been cut from 15,556 to 14,202 in the past year.
Most of the job cuts were ordered in Macquarie's back office, especially IT jobs, in stock broking and investment banking. The majority of the jobs were lost in Australia.
Mr Ward said the bank believed the size of its workforce was now sufficient which meant more widespread job cuts were unlikely.
"It's really been across the bank," he said.
"We always have natural attrition so it's not just termination and redundancies, there's always a level of staff turnover.
"The size of our workforce is under review all the time. But I would think we should be pretty well close to where we we think we should be."
There were 700 jobs cut in Macquarie's corporate business, 600 from Macquarie Securities and 182 in investment banking.
Macquarie now has $3.5 billion worth of surplus capital on its balance sheet and will press ahead with plans to buy back up to 10 per cent of its stock.
The bank will spend $500 million on a buyback, $275 million on an employee retained equity plan and a dividend reinvestment plan.
The buyback is expected to start shortly and will be carried out for the next six months.
Mr Ward said the buyback had been approved by APRA and the bank's board to utilise the surplus capital given the lack of current acquisition opportunities.