http://online.wsj.com/article/SB10000872396390444097904577535180303693776.html
Big Banks Prepare Another Round of Cuts Six Largest U.S. Firms Have Shed Over 18,000 Jobs In the Past Year . By DAN FITZPATRICK and SUZANNE KAPNER Updated July 19, 2012, 11:46 a.m. ET
Global financial companies are preparing to chop thousands of banking and trading jobs, signaling their latest retreat in the face of nervous markets, uneven economic growth, tougher regulations and slumping stock prices. Bank of America Corp. and Credit Suisse Group AG announced plans Wednesday for new cost cuts following hefty belt-tightening at both institutions last year. Citigroup Inc. is on pace to cut an added 2% of securities and banking jobs this year, or about 350 people, after announcing 900 job cuts at the unit last year, said people familiar with the situation. Goldman Sachs Group Inc. said this week that it aims to save $500 million this year on top of $1.4 billion of reductions since last spring, in large part by keeping younger, cheaper workers at the expense of older, costlier ones.
The search for savings underscores the enduring weakness of the banking industry four years after the financial crisis. Recent profits have been bolstered by the release of cash that was set aside to cover bad loans. Revenue, a measure of how much money is coming in the door, has been soft while lending, a measure of a bank’s capacity to generate future profit, remains limp. As of June 30, the six largest U.S. financial firms by assets had cut over 18,000 jobs in the past year, or 1.6% of the total, according to an analysis by The Wall Street Journal. Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs and Morgan Stanley together have cut over 30,000 positions since June 2011. Only J.P. Morgan Chase & Co. expanded its workforce in the past year, adding 12,787 jobs due in part to efforts to clean up its troubled mortgage operations.
More cuts are coming. Credit Suisse raised its cost-cutting target by 50% to 3 billion Swiss francs ($3.06 billion) by the end of next year. Switzerland’s second-largest bank announced the move and a new round of capital-raising in response to pressure from regulators at the Swiss National Bank. The bank said it expects the latest cuts to focus on private banking and investment banking. But banks are loath to cut too deep, fearing they could cede ground to rivals in highly competitive businesses such as investment banking. Goldman Chief Financial Officer David Viniar said Tuesday that the New York firm would cut more experienced employees and replace them with more junior workers and “campus hiring.” Bank of America is pooling junior investment-banking employees across different sectors so they can be routed to whatever area is most in demand at that moment, said people close to the bank. “People are desperate to try and get their expenses under control,” said Michael Madden, managing partner at private-equity firm BlackEagle Partners LLC and former head of investment banking at Lehman Brothers Holdings Inc., but “unweaving that fabric is a very delicate and tricky thing to do.” The cutbacks at many giant institutions belie the relative stability elsewhere in the U.S. banking industry. In the year ended March 31, total U.S. bank employment grew by 7,516 positions, or 0.4%, to 2.1 million jobs, even as the number of federally insured banks and thrifts dropped by 267 to 7,307, says the Federal Deposit Insurance Corp.
No big bank has done more to slim down than Bank of America, based in Charlotte, N.C. Chief Executive Brian Moynihan is focused on reducing risk and scaling back its reach. Under Mr. Moynihan, who took over as CEO in 2010, the bank has sold more than $50 billion in assets, reducing that figure by some 2%. As a result, Bank of America lost its title as the nation’s largest bank by assets to J.P. Morgan and relinquished its top spot in the mortgage business to Wells Fargo. Bank of America has cut over 12,000 positions in the last year, leaving it with a workforce of 275,460 as of June 30. That is the fewest since 2008, when the bank had 243,000 employees.
A new round of cuts announced Wednesday would cut costs by $3 billion annually in its investment-banking, commercial-banking and wealth-management units by 2015. That is 3.7% of the bank’s 2011 noninterest expense of $80.27 billion. The bank didn’t disclose a specific target for job cuts, but they are expected to be in the thousands, said people close to the company. Bank of America previously set plans to cut costs by $5 billion in its retail banking unit, or a total of 30,000 reductions over three years. Wells Fargo Chairman and Chief Executive John Stumpf said Friday that the fourth-largest U.S. bank—and by many measures the industry’s best performer recently—would miss a target of reducing quarterly noninterest expense to $11.25 billion in the fourth quarter. That figure was $12.5 billion in the fourth quarter of 2011. Wells Fargo’s costs, he said, “are still too high…given the operating environment.” At Citigroup, 2,000 jobs have been shed so far this year after the third-largest U.S. bank said in January that it would eliminate 5,000 positions over the next few quarters. The reduction helped Citigroup to lower second-quarter compensation costs by 8% from a year ago to $6.13 billion.
The securities and banking division, which employs about 17,000 people world-wide, already started letting some bankers, traders and sales associates go to trim the workforce by another 2% this year, according to people familiar with the situation. A Citigroup spokeswoman declined to comment on the sales-and-trading cuts but said, “We continue to make targeted headcount reductions in certain businesses as part of our ongoing efforts to control expenses in light of current market conditions.” ________________ Write to Dan Fitzpatrick at dan.fitzpatrick@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com A version of this article appeared July 19, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Big Banks Prepare Another Round of Cuts.
No, you should never jump off a bridge unless you felt completely safe doing so. However, you should start looking for another job on the buy-side if those were in your plans anyway. Obviously it’s no slouch to get a job there anyway, but why limit your options when the Wall Street Journal tells you that the global ship is sinking?
It’s a terrible time to break into finance. No way to sugar coat it.
Getting a job on the buyside won’t be any easier
Don’t listen to the scaremonger media. Bunch of liberal arts fags who smell their own farts. Work hard, do your best, and things will work out. Worry never made anyone successful.
+1 mate! Well said!
Quite right. Worrying converts your mind into a darkroom and in darkroom only negatives develop. Hardwork always pays, often in the long run.
Losing your job ain’t that bad. It can be a good thing.
Sounds like you’d make an excellent trader.
Awesome.
Losing a job is not the worst thing in the world. Build character, forces you to learn from and reflect on the experience you’ve just had, and teaches you to not be a self-pittying pussy.
Keep your eyes on the target.
On the other hand, most people who aspire to FO-ish finance jobs don’t actually make it, despite hard work. There are just not enough jobs for everyone. I think it’s more important to realize that you don’t need to hold yourself to some arbitrary standard in some random field in order to be considered successful.
^ This. I work hard, take care of my billz, and enjoy life all I can. So what if I’m not at parity with Ackerman and Asness. I’m a happy guy and I’ve come a long way from the mean streets of the hood I grew up in.
lol - safely jumping off bridges is fun in the summer
Crude, but very true none the less.
+2