A turbulent end of 2018 mixed with a fairly unimpressive first quarter has Wall Street banks yet again taking the knife to their securities staff. Our analysis suggests the five big U.S. investment banks have cut nearly 350 net jobs in New York in 2019, with much of the carnage coming in the last two months.
As you can see in the chart below, Goldman Sachs, Morgan Stanley, Citi, J.P. Morgan and Bank of America Merrill Lynch have all reduced the number of Finra-registered staff in New York since we first checked the numbers in January. The news isn’t much of a surprise at Goldman Sachs – the bank has filed layoff notices with the New York State Department of Labor twice already this year while also slashing pay – but there hasn’t been much publicly reported concerning other banks on Wall Street. This seems to have been an omission.
Reductions in headcount have increased significantly over the last eight weeks. Only 70 total jobs were lost as of the end of February, with J.P. Morgan actually adding Finra-registered brokers during the first two months of the year. (It’s important to note the numbers represent net losses, meaning they take into account any new hires that have been made in 2019).
Citi’s fixed income traders performed well in Q1, slightly increasing revenues while all other rivals sputtered, but its equities unit saw a 24% drop in revenue. Chief Financial Officer Mark Mason noted during the bank’s recent investor day that Citi has accelerated some of its 2019 plans to cut expenses through the "simplification" of its organization. Apparently that simplification process very much includes traders and other employees registered with Finra (the numbers below exclude financial advisors).
Meanwhile, the two European banks that we looked at in January – Deutsche Bank and HSBC – also saw a significant drop in Finra-registered New York staff. Employing a smaller number of local brokers than U.S. rivals, Deutsche Bank saw the biggest percentage drop among all seven banks that we looked at, which comes as no surprise considering its tenuous situation. Deutsche’s U.S. equities head, Peter Selman, has stressed multiple times that the bank is actually hiring junior traders to make up for the loss of senior staff, though it’s possible those hires are very green and have yet to pass a Finra-sponsored exam that would allow them to trade securities. It's also possible that plan has been put on pause due to the confusion surrounding the Commerzbank merger (or not).
Either way, this may just be the beginning. Yes, there’s the constant threat of continued automation, but one analyst warned last week that Wall Street’s sluggish first quarter may actually be its best of the year. As we reported last week, even tech-related job vacancies have crumbled at Wall Street banks in 2019. The tax-cut infused honeymoon that was the first three quarters of 2018 is officially over.
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