Wall Street is facing the aftermath of a pandemic-era hiring binge as job cuts at the biggest US banks are set to cross 11,000 — making it the worst recruitment market since the 2008 financial crisis — the Financial Times reported.
The layoffs come as executives look to unwind a hiring spree as the economy bounces back. Banks are trying to curb their headcounts, which they otherwise increased to tackle deals and trading boom during the pandemic, the report added.
Only this week, Citigroup announced its plans to cull 5,000 jobs, mostly in investment banking and trading, by the end of the second quarter. The bank was latest to join the haul as its cuts affected thousands of bankers at Goldman Sachs and Morgan Stanley.
“When you look at metrics like the number of jobs coming up, conversion of résumés that turn into interviews and those interviews that turn into offers, those numbers are the most sluggish we’ve seen in a long time,” Max Kemnitzer, managing director for banking and financial services at recruiter Michael Page in New York told FT.
Fear of losing out in a war for talent amid a tight labour market pushed companies to offer generous retention payments to existing staff while also recruiting aggressively, the FT report said.
According to FT, five largest banks that dominate the Street — JPMorgan Chase, Bank of America, Morgan Stanley, and Citi — employed a record 882,000 globally at the end of first quarter and it remained almost unchanged until the end of 2022. This was an increase of over 100,000 compared to the end of 2020.
Goldman Sachs was the only bank to report a significant reduction in the first three months of the year as its headcount fell by 6.4 per cent to 45,400, the steepest drop in years. In comparison Morgan Stanley’s fell a little to 82,266, while at Citi it was flat. JPMorgan has not announced large-scale reductions, the report added.
However, executives are struggling to move the needle on overall headcount in part because employees are leaving at a slower pace amid waning demand for new appointments not just from banks but also asset managers and large technology groups, according to senior bankers.
As bankers receive their annual bonuses in February and begin looking for new openings in March, making spring the traditional recruitment season on Wall Street, with most moves wrapped up by end-June. However, this year saw the pattern being disrupted not just by lower demand but also the recent regional US banking crisis which has raised the spectre of tougher regulation, FT said.