A day after UBS came out with a report that 7,000 jobs would be cut from Australia's banking industry in the next two years, ANZ Bank started the opening salvo by confirming on Wednesday that 130 positions would be declared redundant.

However, the first cut would affect employees in ANZ's commercial and retail businesses. The bank assured frontline staff such as tellers and branch workers that they would be excluded from the lay offs.

The bank's spokesman hinted there would be more staffing changes in 2012 but declined to elaborate on other specific plans. Those who would lose their jobs would be given access to training to help them find jobs in other companies. The 130 who would be laid off could also apply for other positions within ANZ.

"These changes reflect continued belt-tightening in the business given the more subdued economic environment and the continued pressure funding costs are placing on margins," ABC quoted the ANZ spokesman.

The Finance Service Union (FSU) said that the ANZ job cuts are just the start with the three other large Australian banks likely to shed jobs too in the coming time.

"Our thinking here is, the same cost pressure that are applying to ANZ also apply to the other three," AAP quoted FSU President Leon Carter.

Mr Carter criticised the banks for resorting to job cuts since their bottom lines indicate that their lending business still deliver profits to the banks.

"This continues to be a highly-profitable, highly-successful bank and they can afford to do the right thing by their workers who have stood by them," Mr Carter said, referring to ANZ.

He pointed out that ANZ, Commonwealth, National Australia Bank and Westpac enjoyed a collective $24.2-billion cash profit for fiscal 2011 which is 11.5 higher compared to the previous year.

Experts warned that with the job cuts looming over the entire banking sector as the lenders cut costs and expatriate bankers return home to seek jobs compete with local for jobs in Australia's banking industry, customer services may suffer.

They experts said the lay offs could result in poorer customer service, longer wait times and lesser choices for small- and medium-sized enterprises that do business with the cost0cutting banks.

Paul Dowling, the principal analysts of East & Partners - a banking research and advisory company, warned that the 7,000 job losses in the UBS report could just be the tip of the iceberg. He estimated the job cuts could be deeper between 12,000 and 14,000 bank employees at the risk of being laid off.

David Murray, chairman of Future Fund, agreed with Mr Dowling's forecast that the job cuts would likely be deeper as demand for credit declines.

It is not just the big four that are expected to reduce their manpower. Even foreign banks, such as the Royal Bank of Scotland, are expected to cut its number of employees in a bid to attract buyers for its equities and advisory operations as the foreign lender which hold debts of European banks exit from Australia.

For ANZ, the other challenge besides maintaining its frontline service unaffected is a backlash from ant-pulp mill groups if the bank would extend its debt agreement with Gunns, a Tasmanian timber company.

Gunns is renegotiating for a $340-million debt facility with a repayment due date on Jan 31. The firm is seeking to extend the deadline to until December.

The No Pulp Mill Alliance, through advertisements in Australian newspapers, is pressuring ANZ not to accept Gunns' request for extension. If ANZ would not heed the group's call, the alliance warned that it would ask members to initiate direct action. These include sending letter and petitions to make it known to the bank that it opposes the Gunns' proposed $2.3-billion Tamar Valley pulp mill because of its potential to pollute the area.

Although ANZ reiterated on Tuesday its previous position announced in May 2008 that it would not be part of a project financing for the planned pulp mill, the alliance said extension of the Gunns' debt deadline would contribute to the financing of the mill.

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