IG Group Job Cuts Underscore Fragile Banking Sector Despite Renewed City Leasing
Despite robust leasing in the City of London in the third quarter, trading firm IG Group’s decision to cut around 300 jobs — about 10% of its total workforce — has thrown space requirements for financial firms into question.
The trading firm said it expects the headcount reduction, along with other measures, will deliver cost savings of £50M a year.
Trading firms are struggling with falling volumes amid a challenging economy and political unrest internationally. Last month, IG said active users fell in the first quarter of this year. Wealth manager Brooks Macdonald, located on Lombard Street, has also announced it will shed 55 jobs from its 512-person workforce.
Some of the major banks have already made cuts, and nearly all trading houses have seen revenues fall this year, putting a major question mark over their new space requirements.
However, despite the uncertainty, leasing activity across the City submarkets saw an upturn during the third quarter, with just under 1.5M SF leased, according to figures from adviser JLL. This represented a 19% increase compared with the 1.2M SF for Q2 and also surpassed the five-year Q3 average by 16%.
A total of 3.8M SF was let in the year to September, 11% below the 4.2M SF mark from the first nine months of 2022 but 10% above the five-year, year-to-date average of 3.4M SF.
The largest transaction saw Kirkland Ellis pre-let 170K SF at 40 Leadenhall, EC3. Other notable transactions completed in Q3 included Ice Futures taking 127K SF in Sancroft, EC1; 79K SF to Arbuthnot Latham at 20 Finsbury Circus, EC2; and 58K SF to Proskauer Rose at 8 Bishopsgate, EC3.
Pre-leasing accounted for 20% of Q3 activity, with 293K SF either pre-let off plan or let during construction, which JLL predicted would continue to rise as a proportion of total deals, adding that the leasing market is likely to maintain its momentum going into the final quarter of the year.
The professional services sector dominated occupier activity during the quarter, largely due to the significant transactions involving legal firms, although the banking and finance sector accounted for 42% of active demand at the end of September and professional services made up 29%.
“Creating a ‘leaner, more agile business’ may be a reaction to the persistently softer market conditions IG and its peers are experiencing, after the boom during the pandemic,” brokers at Jefferies said in a note about the IG job cuts.
