Few places to hide on Wall Street as jobs ax hovers
- Details
- Published on Friday, 08 June 2012 00:00
- Written by REUTERS
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NEW YORK - Wall Street bankers are bracing for another round of job cuts as a downturn in the global economy cuts into earnings from deal making, capital raising and lending.
Investors, consultants and analysts say that the big banks are just not bringing in the revenue needed to keep their workforces at current levels, especially given the cost of complying with new regulations.
The share prices of the big American banks, which are mostly trading below book value, tell the tale. And bank earnings for the second quarter, most of them to be reported next month, are expected to underscore the gloom. Many on Wall Street say pink slips are likely to follow.
“If things don’t get better, then I would expect staffing levels to come down for sure,” said Alan Johnson, chief executive of Wall Street compensation consulting firm Johnson Associates, who estimated that banks may cut another 5 percent of their workforce by year’s end.
“When banks do that reassessment, it will go beyond just the short-term economics. They’ll be asking, ‘Where is the global economy going? And is there going to be a recovery, or more of a struggle than a recovery?’”
Johnson’s estimate of 5 percent cuts would translate to about 40,000 layoffs in the United States, based on Labor Department data showing Wall Street employment at around 800,000.
Though no formal announcements have been made, signs are appearing that a culling has begun.
Goldman Sachs Group Inc let go several dozen employees in its securities division this week, including some managing directors, in response to weak market conditions, a source familiar with the matter said. Fewer than 50 people were cut across the globe, the source said.
Morgan Stanley is likely to lay off a “modest” number of employees in its investment banking and trading divisions, another source familiar with the matter said. That source said exact numbers had not yet been determined but that most of the cuts would occur in international divisions.
