- Citigroup disclosed to investors this week that it plans to wind down operations by the end of the second quarter, according to the Financial Times.
- Goldman Sachs has cut 3,200 positions, Morgan Stanley plans to cut 3,000 jobs and Bank of America said it will cut 4,000 positions this year.
- Executives are scrambling to reverse bank recruitment to cope with increased turnover amid the coronavirus pandemic.
Citigroup has become the latest U.S. banking giant to announce 5,000 layoffs — Wall Street’s job cuts are expected to reach 15,000 this year.
The bank told investors this week it plans to close the positions at the end of the second quarter, according to the Financial Times.
The punishment for the cuts comes as experts warn that Wall Street is going through one of the ‘most challenging labor markets’ since the 2008 financial crash.
Goldman Sachs cut 3,200 positions in the first quarter, Morgan Stanley plans to cut 3,000 jobs this quarter and Bank of America said it was cutting 4,000 positions by the end of June.
Executives are trying to reverse the recruitment process at banks to cope with the surge in business following the coronavirus pandemic.
Citigroup’s 5,000 job cuts will affect mostly its investment banking and trading departments, and Chief Financial Officer Mark Mason said severance costs will add up to $400 million in costs this quarter.
‘We will remain cost disciplined around driving costs,’ he said at the Morgan Stanley conference in New York on Wednesday.
Sometimes this means a reduction in head count.
Mason said trading revenue fell 20 percent this quarter after the congressional debate over the debt ceiling negatively impacted customer activity.
And Citigroup’s investment-banking division fell 25 percent relative to the industry.
He said: Debt ceiling concerns particularly weighed on investor clients in April and May.
We haven’t seen volatility or activity pick up in the early days of June.’
Experts say Wall Street is currently experiencing its worst hiring market since the 2008 crash, with 15,000 job cuts.
“This is probably one of the most challenging job markets we’ve seen since the 2008 financial crisis,” Max Chemnitzer, managing director of banking and financial services at recruiter Michael Page, told the Financial Times.
‘When you look at the number of jobs that come in, the number of resumes that convert to interviews and the metrics that convert interviews to offers, those numbers are the slowest we’ve seen in a long time.’
Goldman Sachs cut 3,200 jobs in the first quarter of the year, laying off staff in offices in New York, London and Hong Kong.
After the 2008 financial crisis, the layoff rate at the company shows a 6.4 percent reduction, and the company now has 45,400 employees.
Morgan Stanley plans to cut about 3,000 jobs in the second quarter.
The bank’s chief executive, James Gorman, said in December that the bank would make ‘moderate’ job cuts globally, without giving an exact number.
The bank had more than 82,000 employees at the end of March, and the fine will affect about four percent of its employees.
Bank of America says it plans to eliminate 4,000 jobs by not hiring new positions when employees are laid off.
CEO Brian Moynihan told CBS News earlier this month, ‘We’re not going to make layoffs.
“We’re trying to do it thoughtfully, but even the attack is down to half of what it was last year.”
The five banks that dominate Wall Street — Citigroup, Morgan Stanley, JPMorgan Chase and Bank of America — employ a total of 882,000 workers.
This is an increase of over 100,000 compared to March 2020.
JPMorgan Chase has yet to announce large-scale job cuts.
Jane Branhover, head of financial services at recruitment firm DHR Global, said: ‘Recruiting was crazy last year.
They told me that because we are busy with many organizations, we are not just hiring, we are hiring the best talent and keeping them competitive.
It used to be one-out, one-in, but now managers are being told there must be a specific reason to hire.
Now, even if one leaves, it doesn’t mean they are getting permission to hire a replacement.
Wall Street’s investment banks have faced a decline in contracts as investors grow wary of volatile markets and rapidly rising interest rates.
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