Jobs at Wall Street banks are being eliminated at an increasingly rapid pace and this bodes ill for many employed in the financial services sector.
Bloomberg’s recent article “UBS Bankers Face Dwindling Options for Jobs” underscores this situation. Those pushed out at UBS will doubtless find few opportunities on Wall Street. The bigger story, however, is that what is happening at UBS is just a small part of the overall “brain drain” occurring all across Wall Street these days, as the larger global banks are cutting jobs at the fastest rate since 2008.
UBS had announced its intention to cut 3,500 jobs, with 45% of the cuts coming from investment banking, even before the disastrous $2.3 billion trading loss, which UBS has called unauthorized. Observers expect UBS to throw even more bankers out of work at a time when financial firms have already announced more than 120,000 job cuts so far this year. UBS has also announced plans to slash bonuses in response to the trading loss that erased the bank’s $1.3 pretax profit for the first half of the year. Four of the ten business heads at UBS defected earlier this year.
Morale has taken a blow, not only at UBS, but also on Wall Street and at European banks.
HSBC Holdings Plc, Barclays Plc and Credit Suisse Group AG have announced more than 70,000 job cuts. Bank of America said it will eliminate 30,000 positions in the next few years in hopes of saving $5 billion. Goldman Sachs, widely regarded as the mist successful US investment bank, is cutting at least 1,000 jobs.
Rising capital requirements under new rules from the Basel Committee on Banking Supervision are seen as one reason for the cuts in Europe. “They’re likely to be downsizing in fixed income across securitization, exotic derivatives and structured credit,” Dirk Becker, a European banking analyst, was quoted as saying.
The same forces are at work in the U.S. It is true that U.S. banks are downsizing personnel as the economy deteriorates and as certain risky activities are cut in response to Dodd-Frank. Unfortunately, many of those losing jobs are victims of their own firm’s excesses and reckless practices.
J. Boyd Page of Page Perry in Atlanta expects that many of the firms eliminating jobs will also initiate legal claims against former employees to recoup front-end compensation payments and stifle competition. “Recently, we’ve seen firms become more aggressive in suing former employees even when the firm was responsible for the employee leaving. In other words, they are trying to hold others responsible for problems of their own making.”
Page Perry is an Atlanta-based law firm with an active practice in representing individuals in employment disputes with firms in the financial services industry. In the past several years, the firm has won arbitration award for clients in employment disputes in the amounts of $1.7 and $3.9 million. For further information, please contact www.pageperry.com.