It’s long been an unspoken strategy on Wall Street to use restructuring, which is basically a euphemism for layoffs, to get rid of high priced senior employees and then when the dust settles to replace them with inexpensive junior staffers to pretty much do the same job at a lower salary. What’s interesting is that Credit Suisse decided to come clean and just go on record as admitting that’s what they’re doing to reduce costs in this uncertain environment.
So things are not looking too good right now if you’re an expensive senior banker, especially if you’re an expensive senior banker in fixed income. As we noted earlier, Credit Suisse has been targeting is senior staff in its job cuts.
Eric Varvel chief executive of the investment bank, elaborated a little during this morning’s call: “We let go of over 1,000 staff, and 40 percent were senior people.” He also admitted that Credit Suisse “went after senior people to de-layer the [investment banking division], and we made an effort to hire junior people and [integrate them within the firm].”
Granted, Credit Suisse can’t really be considered a Wall Street firm since it’s headquartered in Switzerland. But it’s sure a breath of fresh air to finally hear someone in a position of authority come out and own up to this strategy.
It has also emerged that Credit Suisse will be trimming the remuneration of its executive committee by 57 percent.
UBS Claws Back
UBS appears to be similarly targeting its senior bankers for punishment. On one hand, it’s paying special people special year retention bonuses that amount to around $127,000. On the other, UBS is clawing back 50 percent of share-based bonuses awarded last year to its bankers whose bonuses exceeded $2 million.
Separately, if you are a senior banker who loses your job, Harvard Business Review has an article about how to keep your spirits up. It looks at the case of Edward, a 31-year-old banker, “with student loans, a new mortgage and a third child on the way,” who lost his job in 2008.
“The hardest thing was telling my wife,” Edward said. “She fell down on the couch and cried for most of an hour. For two days, I didn’t sleep.”
Nevertheless, Edward managed to “adapt and improvise” and set himself up as a financial advisor.
He wasn’t the first investment banker to make the move into wealth management and he certainly won’t be the last.