jamie dimon

Massive Wall Street layoffs feared as bank profits a reservoir

Wall Street has spent the last year gorging on bankers. Get ready for the Big Puke.

Rumors of hiring freezes and even layoffs have begun to circulate at financial firms, as soaring interest rates and recession fears have stifled appetite for mergers, IPOs and more. transactions with large companies, sources told the Post.

At an industry luncheon last week with executives from major banks including JPMorgan and Morgan Stanley, discussions were dominated by speculation that the layoffs would wreak havoc on the industry’s workforce of at least minus 10% – and that the bloodbath could be in full swing by the end of the year, sources said. The post office.

“The conversation was about when people think the hiring freeze will happen and when the layoffs will happen,” a knowledgeable source told the Post.

It’s been an about-face since last spring, when junior bankers at Goldman Sachs clutched their bosses at a leaked Power Point presentation on 100-hour workweeks they said put their mental and physical health at risk. .

jamie dimon
“Jamie Dimon isn’t going to let people sit on the payroll idly for long.” a source joked.
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Visits from Blackrock Chairman and CEO Larry Fink "Claman's Countdown" at Fox Business Network Studios on March 9, 2022.
Blackrock Chairman and CEO Larry Fink visits “The Claman Countdown” at Fox Business Network Studios on March 9, 2022.
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Last month, JPMorgan reportedly began laying off hundreds of bankers from its mortgage division, citing “cyclical changes”. Insiders suggest that SPAC-focused bankers could be next on the chopping block in a matter of weeks.

“It will start with smaller layoffs at the start — kids with nothing to do,” one executive told the Post.

Last year, major banks including Goldman Sachs, JPMorgan and Morgan Stanley raised salaries for entry-level bankers to unprecedented levels, in part because of a feeding frenzy for so-called “blank check” companies. , or SPAC – a new vehicle for taking companies public. quickly that sparked unprecedented transaction volume last year as the pandemic waned.

But those deals have since dried up, setting the stage for a jobs carnage, sources said. Last week, JPMorgan Chase and Morgan Stanley both reported surprisingly steep profit declines. While JPMorgan revealed its investment banking fees fell 54% in the last quarter, Morgan Stanley said its stock underwriting fees were down 86%.

“Banks brag about how they manage costs versus revenue,” Wells Fargo banking analyst Mike Mayo told The Post. “My advice to investment bankers is not to spend this year’s bonus in the Hamptons just yet.”

Still, banking sources have predicted that most senior figures will remain cautious at least until the end of the summer before sharpening their axes. That’s partly because they aren’t keen to restore their reputation for being ruthless, and partly because some are still hoping the economy might rebound this fall. As such, they do not want to cut their departmental budgets mid-year.

david solomon
Last year, junior bankers at Goldman Sachs, led by David Solomon, leaked a Power Point presentation on overwork.
AFP via Getty Images

“The next two months are actually a great time for underachievers,” a source said. “Banks hang on to everyone – If they fire someone, they might not get permission to rehire anyone.”

Similarly, the 100-hour workweeks of junior bankers have in some cases been reduced to between 50 and 60 hours, according to the sources. Community service hours have skyrocketed and “people have time to paint houses in Washington Heights this summer,” according to a source.

Indeed, the signs of concern about the end of the boom are multiplying in the base. A banking source noted that he “sees marginally more people in the office as layoffs loom”.

“Certainly there are interns,” the source said. “But I haven’t seen elevators this full in years.”

Indeed, while up to 90% of Wall Street interns got jobs at the height of the hiring spree, that percentage is now “materially lower,” according to a well-placed source.

“It’s the worst-kept secret that layoffs will happen,” another insider observed. “There is a whole generation that has never experienced an economic crisis. It’s going to be new and painful for a lot of people.

Another source added: ‘Jamie Dimon won’t let people sit on the payroll idly for long.

The slowdown in transactions is also expected to affect law firms specializing in mergers and acquisitions and transactions.

“Gone are the days of companies having someone recruit junior associates for their dry cleaning,” an insider joked. “Companies are greedy and they are very sensitive to maximizing profits.”

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