Acting Treasurer Bill Shorten criticised Thursday the planned manpower cuts in Australia's banking industry estimated to result in the loss of 7,000 jobs. He accused the lenders of putting profits ahead of jobs.

Shorten challenged the bank shareholders that if they care about keeping the jobs in Australia they would not agree to the declaration by the lenders of a significant number of employees as redundant.

The official's reaction to the reported upcoming massive job cuts came amid reports that Westpac placed 28 IT management staff for review as part of the bank's restructuring. The affected technology workers are from the BT Financial Group and Westpac Institutional Bank.

The bank stressed that no redundancies had been made and that whenever possible, the affected workers would be redeployed.

On Wednesday, ANZ Bank confirmed that it would declare 130 jobs redundant right after the UBS report that estimated up to 7,000 jobs to be shed in the banking industry.

Westpac clarified that the review was announced by the bank in November with the aim of creating a new group services division that would include IT, property services, legal services and banking operations. It would also result in the creation of an Australian Financial Services division that would combine its retail and business banking, St George Bank, BT, banking products and risk management.

The Westpac review includes all business units in Australia and New Zealand. The bank, which has more than 37,000 employees, plans to reduce its manpower but has no definite target numbers on how many workers would be laid off.

The Devonport Times reports that Westpac is expected to cut by as many as 600 positions as the banks cut higher cost contract-based staff and reduce duplication in roles at its head offices. Westpac actually started the downsizing in 2010 when it shifted 200 back-office jobs offshore.

The UBS report said that besides laying off workers, the Australian banks would offshore some of the tasks performed by the employees to countries such as India where labour cost is significantly lower.

In ANZ, the first to go would be some members of the bank's anti-fraud unit. Reports said that 23 employees of the team's 144 workers would be laid off on March 28. The move is expected to lead to a rise in fraud-related writeoffs.

The unit focuses on misuse of Internet banking, cheques, mortgages, personal loans, car loans, EFTPOS facilities and ATM skimming. Because of the downsizing of the unit, an ANZ employee warned that by the time a fraud case becomes known, it would to too late to catch the scam.

However, ANZ assured depositors and clients that their accounts would remain secure despite the planned reduction in anti-fraud employees because it has invested in technology that provides ANZ the same level of fraud protection with less need for manual intervention.

Mr Shorten reiterated the charge by the Finance Services Union that the big four collectively made $24.2 billion cash profit for fiscal year 2011 which is 11.5 times higher than its previous year's profit. However, he acknowledged that the operating environment in the last months as well as the coming days would be different.

"At the moment we are in the midst of a tough set of global financial circumstances and the banks are experiencing that more than other parts of the financial services sector," The Australian quoted Mr Shorten.

"The government thinks the banks do make big profits and we regard job losses as the final resort, but I can't stick my head in the sand and pretend there isn't an upheaval going on in the banks around the world," he added.

His statement comes on the heels of a warning by the World Bank that in the next six months there may be another global financial crisis that would result in chaos worse than what happened in 2008.

Besides bank employees, Mr Shorten said as more workers from other industries across Australia are laid off, the country's unemployment rate could rise further to 6 per cent from the current 5.2 per cent.

The Australian Bureau of Statistics reported on Thursday that the country's joblessness rate was at 5.2 per cent when 2011 ended. The rate is slightly lower than economists' expectation of a 5.3 per cent unemployment rate.

That figure was the result of the number of full-time jobs rising by 24,500 to 8.05 million in December, while part-timers declined by 53,700 to 3.37 million.

City Index chief market analyst Peter Esho said that the current unemployment rate would probably not change the Reserve Bank of Australia's position to bring down the overnight cash rate, but he acknowledged that it could delay the next reduction until March.

"Financial institutions, particularly the banks, are preparing the market for large job losses and when the participation rate changes, there could be a double whammy effect on the level of unemployment," The Australian quoted Mr Esho.

RELATED STORIES