http://dealbook.nytimes.com/2011/06/16/as-profits-wane-wall-street-braces-for-new-layoffs/?emc=eta1
***************
"Successful leaders make the right move at the right moment with the right motive." (John C. Maxwell)
***************
Since the "profits" on Wall Street are not as big as they were before the crisis and potential regulations (Dodd-Frank) appear problematic, several firms are planning major expense reductions this summer.
Goldman Sachs (by most accounts, Wall Street's most profitable firm) has concluded it needs to cut 10%, or $1 billion, of non-compensation expenses over the next 12 months. According to some sources, Goldman is "certain" to shrink headcount over the next few months.
Bank of America will be cutting staff from its securities division and Credit Suisse from its investment banking unit.
Regulation has caused some banks to exit some businesses like proprietary trading.
The last significant industry-wide job cuts were in early 2009 - Goldman cut its workforce by 9% then. They have not added back since. So, further cuts would simply continue to reduce their overall staff from pre-2009 levels.
All of this relates to Return on Equity measures that have shrunk substantially from 2005 levels: 8.2% in 2010, down from 17.5% in 2005.
Overall, from a U.S. "jobs" perspective, this sector isn't going in the right direction. Message to Jeff Immelt...
Subscribe to:
Post Comments (Atom)
Agreed from the overall US jobs perspective, but it makes sense from a financial services perspective. There was a bubble that peaked in 09. Those jobs are artificial as a result of the bubble.
ReplyDeleteI for one am glad that those people will be forced to move into other industries. It means the brightest minds may start to think twice before they go into those fields.
Marcelo: great point. My problem is where do these people end up? We'd have to look closely at the skills base of the population being reduced and see how "versatile" it is within and outside of Wall Street.
ReplyDelete