Banks Trim Pandemic-Fueled Headcount

Banks are set to undertake the largest wave of job cuts in 15 years amid declining revenues.

Industry watchers told the Financial Times (FT) the layoffs — expected to be in the tens of thousands — reverse a trend of widespread hiring and banks’ reticence to let go of workers during the pandemic.

“The job cuts that are coming are going to be super brutal,” Lee Thacker, owner of financial services headhunting firm Silvermine Partners, told the FT in a Saturday (Jan. 21) report. “It’s a reset because they over-hired over the past two to three years.”

The past few months have seen banks that include Goldman Sachs, Morgan Stanley and Credit Suisse slash more than 15,000 jobs. Industry experts said they expect other banks to make similar moves.

“We’ve seen some warning shots from the U.S.,” said Thomas Hallett, an analyst at Keefe, Bruyette & Woods. “Investors need to see management acting on cost and trying to maintain a reasonable return profile. The Europeans will tend to follow the U.S. banks.”

Ana Arsov, co-head of global banking at Moody’s, predicted the cuts would be less severe than during the 2008 financial crisis, but worse than what followed the 2000 dot com bust.

PYMNTS noted late last year that several investment banks had cut staff in Europe, including Citi, Deutsche Bank, and Credit Suisse, as deal-making stalled and markets stagnated.

Last week also saw the news that Bank of America was freezing much of its hiring as it prepares for a possible recession.

A report by Bloomberg News said the bank will take a break from hiring until at least the middle of the year or the economy picks up steam. Hiring will continue in areas that have seen revenue growth, such as business banking, wealth management and trading, the report said.

The banks’ job cuts are happening as a storm of layoffs hit a number of other businesses. Google parent Alphabet announced Friday (Jan. 20) that it was cutting 12,000 jobs across the company’s product areas, functions and regions.

“Over the past two years we’ve seen periods of dramatic growth,” CEO Sundar Pichai said in a message to employees. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”

Tech companies reduced their headcounts by more than 153,000 last year, with Meta slashing 11,000 jobs and Amazon cutting 10,000.