(Adds comments from BB&T CEO; updates share prices, paragraphs5, 6, 11)
By Olivia Oran
Feb 9 (Reuters) - Goldman Sachs Group Inc and otherU.S. banks are looking at ways to slash expenses further thisyear as market turmoil, declining oil prices and concerns aboutGermany's Deutsche Bank AG have sent the sector'sshares down sharply.
"We can absolutely do a lot more on the cost side if we haveto, especially now, when you have to deliver a return," GoldmanChief Executive Officer Lloyd Blankfein said on Tuesday at theCredit Suisse financial services forum in Miami.
"We take a particular and energetic look at continued costcuts when revenues are stalled," he said. " ... Necessity is themother of invention."
U.S. Bancorp Chief Financial Officer Kathy Rogers echoedBlankfein's comments at a separate panel, saying her bank wouldkeep cutting costs this year. She cited a smaller chance thatinterest rates would rise, which would have indicated a strongereconomy and more revenue for the bank.
BB&T Corp CEO Kelly King said the bank has rejectedbroad-based layoffs so far and remains focused on managingexpenses in a way that will not hurt business in the long-term.
"Cutting expenses with a butcher's knife and a bad attitudeis not going to produce good results," he said.
As executives were speaking at the conference, Deutsche Bankshares hit a record low, following their 9.5 percent plunge onMonday.
Although the bank has said it has sufficient reserves,investors have worried that it will not be able to repay somebonds that are coming due. The bonds, called AT1 securities,convert into equity in times of market stress.
Deutsche Bank's woes reflect broader concerns about thehealth and profitability of euro zone banks. Last week, SanfordBernstein analyst Chirantan Barua said Barclays Plc should spin off its investment bank in an effort to revive itscore UK retail and commercial business.
Major Wall Street banks have also had a brutal start to2016, with the KBW Nasdaq Bank index down 18 percent on concernsabout profitability.
Most of the large U.S. banks ended trading on Tuesday withshares flat, while Morgan Stanley closed up 1.2 percent.
Since demand for U.S. bank shares began to weaken in lateNovember, the sector's top five stocks have lost 20 percent oftheir market capitalization, or around $120 billion.
Almost 70 percent of the banks deemed globally significantare trading below their tangible book values, or what they wouldbe worth if liquidated. Analysts say if this continues, banksmay have to restructure more drastically to cut costs.
Investors said bank executives would need to look at otherways to boost profitability now that hopes for further interestrate hikes have faded.
"They're going to have to come up with other levers to pull,whether it is investing in technology or reducing headcount,"said John Fox, chief investment officer at Feinmore AssetManagement, which invests in financials. "There will be morepressure on expenses because of the interest rate environment."
NOT SINGING "KUMBAYA"
Banks have already engaged in major cost-cutting over thelast several years, as low interest rates and strict regulationshave crimped profits in areas like fixed income trading.
At Goldman, headcount in its troubled fixed-income tradingbusiness has already declined 10 percent since 2012, Blankfeinsaid. The bank has transferred many jobs to lower-cost locationslike Bengaluru, India, Salt Lake City and Dallas, where 25percent of its employees are now based.
Goldman is also looking for ways to reduce payments tooutside vendors.
Other U.S. banks have been taking similar steps.
Morgan Stanley said in January it planned to cut another $1billion in costs by 2017 by leaning more on technology andincreased outsourcing. Last year, it eliminated about 25 percentof jobs in its fixed income division as it tries to lift itsprofitably to 10 percent.
JPMorgan Chase & Co's investment bank is in themiddle of a $2.8 billion expense-reduction program.
Bank of America Corp is looking to keep quarterlycore expenses below $13 billion, which it has accomplished fiveout of the last six quarters, Chief Financial Officer PaulDonofrio said last month. That target comes after years of costreductions.
Offering his outlook on Tuesday, Blankfein said he believedglobal markets would improve, "but we aren't holding hands andsinging 'Kumbaya' to get better."
(Reporting by Olivia Oran in New York; Additional reporting byDavid Henry and Dan Freed; Editing by Lisa Von Ahn and DavidGregorio)
Barclays (BARC)
