Banking employment must be plummeting as the industry continues to consolidate and downsize, right?

Guess again.

According to the Bureau of Labor Statistics, employment in the commercial banking industry is on an upturn that began in the spring of 1996 with only minor interruptions.

The trend follows a six-year slide that started in mid-1990, when the industry had 1.58 million employees.

Last month 1.51 million full- and part-time workers were employed at commercial and savings banks. The total was 3.7% higher than in March 1996, which was the low point of the 1990s.

The Federal Deposit Insurance Corp.'s statistics for federally insured banks show similar movement.

Though the employment surge flies in the face of conventional downsizing wisdom, some industry observers are not surprised. They attribute it to the strong economic growth that is fueling demand for a host of retail services, including credit cards, mortgages, and investment products.

Banks are also bulking up in capital markets areas.

But while bankers and other industry observers are generally pleased about growth and its implications, they point out that most new positions fall at the bottom of the food chain.

"The number of total executive positions continues to fall," said J. Gregory Coleman, managing director of the recruiting firm Korn-Ferry International. "With the rise of telephone call centers, you are seeing more hiring, but it's at the lower end."

Call centers, a hotbed of new hiring, operate 24 hours a day and offer flexible hours that may be raising the part-time component of the national labor statistics.

In recent months, institutions of varying sizes and corporate strategies have gone on hiring sprees or have announced plans for future hiring. Much of it is in the credit card area.

Synovus Financial Corp. has added 458 positions at various units in the Columbus, Ga., area where it is based, a 10% staff increase, said Helen Johnson, a vice president and director of employment services for the bank. The bulk of the hiring was at Total System Services Inc., the fast-growing credit card processing subsidiary.

Most of the openings were for programmers and other technical support positions, she said. The annual pay ranges from $30,000 to more than $100,000.

But the bank has also hired dozens of customer service representatives who make $20,000 to $30,000.

"Most of the new jobs in banking are being created in sales," Ms. Johnson said. "We are looking at ways to access new customers."

People's Bank of Bridgeport, Conn., has added 300 jobs in the past year, most of them at the level of telemarketers or supermarket bankers. The thrift expects to bring on more as credit card receivables grow at a 20% clip in both the United States and the United Kingdom, where People's has also set up shop.

Chase Manhattan Corp. announced last month that it plans to add 1,100 back-office jobs at its Tampa operations facility. Most are slated for credit card customer service and collections, but some will be in auto finance and technology units.

Wall Street has a mixed reaction to the hiring uptick.

Merrill Lynch & Co. cited the banking employment surge as one reason for its downgrade of the commercial banking industry six weeks ago from an "over-weight" to a "market weight" rating.

"You want to be improving margins, and you want to see a lot of productivity per head," said William Rhodes, vice president in Merrill Lynch's investment strategy division. "If you are hiring more people, productivity won't be as high."

R. Harold Schroeder, an analyst with Keefe, Bruyette & Woods Inc., New York, doesn't make much of the Labor Department numbers, given the strong productivity gains most banks have made.

"What's important to me is the continued refinement in the banking industry, which has led to higher revenues per employee," he said. "That is continuing."

Synovus' Ms. Johnson said her company will increase hiring at least through 1998. David E.A. Carson, chief executive officer of People's Bank, said he also expects to continue hiring-and it may come in new areas, such as insurance sales.

The last time bank employment rose as much as it has in the past year was the period between 1988 and 1990. But Mr. Coleman said the two periods have little in common.

"In the 1980s it got to the point of being frivolous," he said. "It was throwing bodies at demand. Today there is a more studied approach to adding people."

"Banks are very careful not to ruin the efficiency that has been built up," Mr. Coleman added.

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