Wall Street Firms Apparently Planning Massive Job Cuts


Wall Street banks could soon cut as many as 21,000 jobs in New York alone, say Wall Street consultants and recruiters. Worldwide cuts could be even larger (“Large layoffs loom on Wall Street,” Stephen Gandel, CNN Money). While the stock market is up this year, and many smaller investment banks have been hiring, and the big banks have reported better than expected earnings for the first quarter, Wall Street executives believe they have too many employees.

Wall Street eliminated 28,000 positions in the wake of the collapse of Bear Stearns and Lehman Brothers, and the biggest crisis in the financial markets since the Great Depression.

The Boston Consulting Group issued a report predicting that banks would eliminate 12% of their workforce in the “short-term.” Recruiters report that they are hearing the same or worse from the large firms. “The estimate is possibly low,” financial industry recruiter Steve Potter of Odgers Berndtson, was quoted as saying, adding: “Large layoffs are a virtual certainty.”

The layoffs will likely include investment bankers as mergers and acquisition activity has not bounced back as expected.

In addition, new regulations appear to already be significantly curtailing the banks’ trading operations, and Moody’s and Standard & Poors are likely to soon downgrade the big banks, which could lead to $22 billion in additional costs or collateral requirements.

“There hasn’t been enough action on the cost front to keep up with the revenue short falls,” says Chandy Chandrashekhar, a partner at BCG who helped to produce the recent report. And unlike other rounds of layoffs, Chandrashekhar says many who lose their jobs this time around could be senior bankers, and, for those that remain, compensation is likely to drop by as much as 30%. “Banks need to revisit whether they need all of their management layers.”

The firm likely to cut the most may be Credit Suisse. Last year, Credit Suisse reported plans to eliminate 3,500 jobs, across the whole bank, not just its Wall Street business, and it may cut more than 3,500. So far, 2,000 jobs have already been cut, and most of the remaining cuts will reportedly come from the investment bank.

Other likely investment banking job cutters are Bank of America Merrill Lynch, Barclays, and Goldman Sachs.

“Banks haven’t come up with a model that makes up the profits they used to get from proprietary trading, CDOs and other structure deals they used to do,” Wall Street recruiter Gary Goldstein was quoted as saying, adding: “I have heard about a lot of people who didn’t get the promotions they were expecting. That’s usually a sign that banks are getting ready to get rid of people.”

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.