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Business trends

Japan's megabanks to cut new hiring by 30%

Ambitious college students' preferred landing spots are digitizing

Japan's megabanks are being hit by deteriorating earnings. (Photo by Ken Kobayashi)

TOKYO -- Japanese megabanks, which had already been cutting back on hiring as they digitize their operations, are now accelerating these efforts as their earnings deteriorate.

The trend is hitting new university graduates hard. Japan's brightest students have long coveted jobs at the megabanks, which offer high salaries and secure careers.

But the trend could be a boon for smaller businesses, which will now have a better chance of hiring Japan's brightest young minds.

Combined, the megabanks have hired more than 3,000 new graduates this spring, half the number they brought on right before the global financial crisis struck in the fall of 2008 and decimated bank earnings.

Next year the combined total is expected to be 2,300.

A total 1,360 new employees are expected to join Mizuho Financial Group next week. And next year the megabank plans to hire about half as many new grads as it cuts back on teller and clerical jobs.

The Bank of Tokyo-Mitsubishi UFJ is bringing in 1,030 new grads this spring and is considering a hiring cut of nearly 10% for next year. The big bank's goal is to digitize 9,500 employees' worth of jobs by the year ending in March 2024. In that time, it intends to reduce its group workforce by 6,000.

Mitsubishi UFJ's plans include partially automating the screening of housing loans and guiding customers to complete online application forms. It also intends to cut the number of its branches.

Workforce surpluses will be directed to potential growth areas, such as trust operations.

Sumitomo Mitsui Banking is bringing aboard 800 or so new college graduates this year. Next spring, it will likely cut back on new-grad hiring by 20% to 25%. Sumitomo Mitsui Banking still has employees track cash transactions and money transfers by poring over paper forms. The bank is preparing to digitize this work and centralize it at nine operation centers across the country.

For the past several years, each of the three megabanks has provided more than 1,000 openings. But in a way, "we have been wasting talent," one bank executive said.

The executive said Japan's banks attract the country's smartest students, many of whom, once hired, end up doing trivial chores. Later in their careers, those who have not been put on the executive track are transferred to subsidiaries and smaller partner companies or simply leave. 

Another factor in the hiring cutback could be the all the new competition the banks are facing.

Still another is female employees who are remaining in their jobs longer than they used to. In Japan, women often exit their careers after giving birth. But now banks are encouraging mothers to take child care leave, then come back to work.

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