Wall Street starts layoffs of thousands

2023-01-12 14:07:15China Daily Editor : Li Yan ECNS App Download

Two of Wall Street's biggest financial firms on Wednesday started cutting thousands of jobs, with Goldman Sachs cutting up to 3,200 and BlackRock up to 500.

A sharp downturn in investment banking and struggles in retail banking are behind the cuts at Goldman. It is one of the biggest rounds of layoffs at Goldman since the 2008 global financial crisis. Goldman has also struggled to gain traction in consumer banking despite hefty investments.

The aggressive interest rate hikes by the Federal Reserve also have hit the markets and earnings at financial firms.

Goldman had just over 49,000 employees at the end of September. And even after this week's layoffs, Goldman Sachs' head count is expected to be larger than it was before the pandemic.

The cuts at Goldman represent about 6.5 percent of the workforce. Goldman skipped an annual culling of staff in 2020 and 2021. Meanwhile, Goldman reportedly is still moving forward with plans to hire junior bankers and in other areas as needed.

A spokesman for BlackRock, the world's largest asset manager, cited "an unprecedented market environment" as the reason for the layoffs. Following the layoffs, which represent about 3 percent of staff, the company said it will still have more employees than it did a year ago.

BlackRock grew its workforce by more than 20 percent over the last three years when it and other Wall Street firms hired aggressively during a market boom.

Chris Kotowski, an analyst with Oppenheimer and Co, said everyone working on Wall Street gets accustomed to kinds of staff reductions, that it is part of doing business.

"You know, people just don't work out," he told National Public Radio. "Sometimes you expanded into an area that just wasn't fruitful, and sometimes you've just overhired.''

Other Wall Street firms are also trimming headcount. Morgan Stanley is cutting about 2 percent of its global workforce, and other investment banks might make cuts in the coming weeks depending on whether revenues are tracking below estimates in February and March.

"If things haven't gotten better in the first quarter, we'll have more changes," said compensation consultant Alan Johnson. "You can't have these expensive people sitting around with nothing to do."

The layoffs come as Wall Street firms prepare to announce bonuses for 2022, but analysts have said for weeks the payouts will be greatly reduced at all levels. Salaries for senior bankers can range from hundreds of thousands to millions of dollars, while their bonuses can be double or triple their base.

The layoffs aren't limited to Wall Street.

Dow Jones, a division of News Corp that includes The Wall Street Journal, Barron's and MarketWatch, plans to lay off employees today, according to IAPE, the union representing unionized Dow Jones employees. Dow Jones hasn't announced layoffs.

The layoffs appear to be global, IAPE wrote, but won't include the Journal.

The news industry announced 1,800 job cuts last year, up 20 percent from 1,500 in 2021, according to a January report from Challenger, Gray &Christmas.


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