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One figure to watch out for when considering working at a smallish bank

Numbers

Not everyone is capable or even willing to work for a large bulge bracket bank like a Goldman Sachs, Bank of America or Citigroup. There are plenty of smaller banks that play in a similar, albeit smaller sandbox. But when eyeing one of these more minute firms, make sure to keep your eye on their asset totals. That number could help define their growth path.

As part of Wall Street’s new regulatory landscape, bank holding companies that report having more than $50 billion in assets, on average, over four consecutive quarters are deemed “systematically important.” That means they are subject to all the capital rules, stress tests and regulatory red tape that the big banks are obliged to follow.

For mid-sized banks like New York Community Bancorp, crossing that threshold has enormous ramifications, namely compliance and risk costs along with tight restraints on lending, according to the Wall Street Journal.

Banks that are teetering around the $50 billion mark essentially have two choices: cut assets and make sure to stay below the figure, or go big and take on billions more to spread the costs of the regulatory burden.

We’ve already seen each approach undertaken this year. RBS is in the process of cutting $10 billion in risk-weighted assets to stay below the $50 billion figure. As part of that effort, it’s cutting roughly 400 U.S. jobs over the next 18 months.

Then there is CIT Group, with roughly $49 billion in assets, which just agreed to acquire OneWest Bank for $3.4 billion.

“If we had grown to just $52 billion we would be in the worst spot,” CIT’s Chief Executive John Thain told the Journal. “We’d have had all the expense of going over $50 billion but only $2 billion more of assets to cover the expense base.”

For employees, each scenario can have its drawbacks. The former being rather obvious, with asset cuts often leading to job losses. On the other end, mergers and massive growth can create opportunities for redundancies. When you combine companies, you’ll often find two people doing the same job.

Either way, keeping your eye on your employer’s asset totals can give you a better idea of what they may do next.

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