In a research report released on May 28, Morgan Stanley analysts noted that the accelerated adoption of AI is expected to drive European banks to cut 10% to 20% of their workforce over the next five years, peaking at over 400,000 job cuts—doubling the bank’s January estimate of approximately 200,000. Analysts, including Giulia Miotto, stated in the report that productivity gains have already reached 30% across the industry following the introduction of AI and digital tools. The most heavily impacted roles are concentrated in back-office operations, middle-office functions, risk management, and compliance; most layoffs are expected to be carried out through milder methods, such as voluntary resignations and early retirement.
Looking at actions already underway, Netherlands-based ABN Amro plans to cut about 20% of its full-time staff by 2028; HSBC announced in March this year that it would cut approximately 20,000 positions, explicitly citing AI replacement; and Societe Generale CEO Slawomir Krupa also stated in March that there are “no areas off-limits” for cost-cutting. However, analysts also cautioned that labor laws in many European countries set thresholds for union consultation and collective bargaining regarding large-scale layoffs, meaning actual implementation may be slower than expected. The forecast is currently a scenario-based projection; whether it translates into actual reductions still depends on how bank boards balance shareholder pressure against political costs.