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Wall Street’s biggest banks cut 30,000 jobs last year, a move that comes as Goldman Sachs plans to carry out the deepest layoffs since the 2008 financial crisis shortly after Christmas in 2022. This was triggered by the notification.
Goldman’s 3,200 job cuts were followed by 3,500 at Morgan Stanley and 5,000 at Citigroup. Bank of America refrained from making major job cuts, but 4,000 employees nonetheless left the company last year under a “natural attrition” approach.
European banks refrained from major job cuts last year, with the exception of Credit Suisse, which began cutting thousands of jobs before being acquired by archrival UBS in March.
Times have changed.
Whether it’s to revive sluggish share prices, free up funds for share buybacks, advance technology, rethink strategy, or simply contain costs, Europe’s largest banks are cutting jobs or retaining staff. Bank bonuses are being reduced.
Read ‘Donut’ Loom: Bankers prepare for brutal bonus season
“This is a balancing act for many European banks, especially after two years of poor performance in their investment banking divisions. ” said Gary Greenwood, bank analyst at Shore Capital.
Barclays is due to announce a strategic review alongside its annual results on February 20, with the UK lender aiming to cut costs by £1.25bn. So far, the layoffs have primarily hit support departments. Deutsche Bank said it expects savings of 2.5 billion euros after a 6% increase in headcount in 2023, with 3,500 jobs cut next year, mainly in back-office sectors.
Société Générale is cutting 900 jobs at its Paris headquarters as part of new CEO Sławomir Krupa’s cost-cutting plans, while UBS is cutting jobs as it merges with Credit Suisse Approximately $6.5 billion has been set aside for employee expenses.
On a smaller scale, Rothschild cut about 10 jobs in its investment banking division in January, with former Goldman trading executive John Brennan leaving.
“U.S. banks have been much more aggressive in reducing headcount than European banks,” said Stéphane Lambosson, co-founder of headhunting firm Vici Advisory. “European banks are currently focused on costs, but each case is specific to each bank’s situation rather than market conditions. They will be rehired.”
In addition to job cuts, bankers are enduring another grueling bonus round. Bankers said UBS’s influx of existing employees, Credit Suisse employees and a flurry of senior dealmakers from Barclays with guarantees last year has helped to boost its already small capital. It is said that there is widespread dissatisfaction with UBS due to the decentralization of the company.
Barclays has given up to a third of its dealmakers in some divisions zero bonuses, bankers said. financial newsand bloomberg We previously reported that “dozens” of employees will be working at Donut this year. Deutsche Bank also has to digest an expensive recruitment drive and its £410m takeover of City’s brokerage firm Numis, and will also cut its bonus payments.
read Investment bank faces talent shortage even after significant headcount cuts
“We’re seeing a similar but more aggressive trend in European banks in terms of job cuts and reductions in bonus pools,” said Chris Connors of Wall Street compensation consultant Johnson Associates. “European banks are struggling to keep pace with U.S. banks in terms of performance and compensation. European bankers will be just as disappointed as their US counterparts, given that they are still well below 2021 levels. ”
While U.S. banks cut dozens of dealmakers last year, some European players took advantage of the disruption. Deutsche has hired 50 senior bankers, while Santander has hired dealmakers from both Goldman Sachs and Morgan Stanley, as well as in the aftermath of its acquisition by Credit Suisse.
Most of the job cuts at European banks so far have focused on executive and back-office functions, particularly as banks prepare for a resurgence in deal-making activity after nearly two years of stagnation. There is little indication that major cuts in investment bankers are being considered. But the headhunters said: FN We found that many banks are taking a more cautious approach to hiring senior talent.
Deutsche Bank CEO Christian Sewing said in a fourth-quarter earnings call that the bank is “positioning itself for a recovery in origination and advisory” after a wave of hiring. “Now we see a huge potential for growth here,” he added.
“Investment banking is a people business, so banks will be reluctant to let too many people leave,” Greenwood added. “Things can change. Recovery is possible, but there are still many risks in the market.”
To contact the author of this article with feedback or news, email Paul Clarke
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