As if the markets weren’t volatile enough already.
“Consultants and Wall Street recruiters say banks could eliminate nearly 21,000 jobs from their securities divisions in New York alone,” Fortune reports.
21,000? Do you know what that means?
“That would be a bloodbath on par with the one that occurred during the financial crisis; 28,000 were eliminated in that purge, but that number included jobs lost in the collapse of Bear Stearns and Lehman Brothers,” writes Newser’s Kevin Spak.
Recruiters say the larger financial firms are putting the finishing touches on their downsizing plans and that the layoffs aren’t too far off.
Luckily, there’s a silver lining: even though the larger firms are preparing to fire hundreds if not thousands of employees, smaller investment banks are still hiring. This could potentially offset the major layoffs.
“Hiring is going on, it’s just not by the big banks,” says a top Wall Street recruiter Gary Goldstein, according to Fortune.
Still, this story points to two large problems: larger financial institutions hire more employees than they need and they fail to make the appropriate cuts when necessary. So here we are in 2012 and we’re talking about 21,000 people getting the axe because of poor planning. As the Fortune report notes, the entire situation points to the unpleasant reality that Wall Street operates on an inadequate staffing model.
“Last week, The Boston Consulting Group released a report that predicted banks would eliminate 12 [percent] of their workforce in the ‘short-term,’” Fortune reports, “Recruiters say those numbers sound similar to what they are hearing from the large firms.”
On the list of firms most likely to make deep cuts in their investment banking divisions is Credit Suisse, Bank of America, and Barclays. Overall, recruiters expect all of the banks to make cuts (just not as deep as the aforementioned three).
“Banks haven’t come up with a model that makes up the profits they used to get from propriety trading, CDOs and other structure deals they used to do,” says Goldstein. “I have heard about a lot of people who didn’t get the promotions they were expecting. That’s usually a sign that banks are getting ready to get rid of people.”