17 July 2019

Wall Street Staffing Falls Again

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The number of investment bankers, traders, salespeople and research analysts at the world’s largest banks has fallen 20% globally since its recent peak in 2010, a report by Coalition Ltd., a London research firm, shows. The latest data come after the firms, 10 of the world’s largest, trimmed 4%, or 2,100 employees, in 2014 from a year earlier amid a challenging trading environment on fixed-income desks.

The declines show that a trend on Wall Street is gaining momentum. The biggest banks are making do with fewer numbers on the front lines—or those who deal directly with clients and bring in revenue. New rules on capital and risk taking have crimped profit, forcing banks into tough decisions about businesses to exit from and veteran moneymakers to turn loose.

Among bankers and traders, however, staffing has been falling for four consecutive years, Coalition said. The big banks face a crossroads on their staffing. Cutting more jobs may begin to limit their ability to generate revenue. The research firm noted that there were some 51,600 “front-office producers” working for the 10 banks at the end of 2014, down 12,800 from the 64,400 in 2010 after many big banks such as Morgan Stanley and others staffed up following a busy period in bond trading.

Wall Street is notorious for overhiring in good times and reversing course when business weakens. But some say these declines are different, coming as bank executives deal with a long slump in some of their biggest businesses, including FICC trading. The Coalition report shows the banks’ FICC trading revenue fell for a second-straight year, dropping 7% in 2014 to $69.4 billion. That market totaled $141.6 billion in 2009.

The cuts represent banks’ effort to eke out profits in an environment where that has become more difficult because of regulatory crackdowns on risky assets and heavy borrowing. The pay of investment bankers and traders is a key lever for banks’ cost controls, since such employees often make $1 million a year or more, far in excess of the amount an average bank employee makes.

The report didn’t factor in employees who work in back-office or support functions. It also doesn’t include wealth-management businesses, which have thrived amid the stock-market rebound and baby boomers’ need for financial advice.

Moves made by Wall Street’s giants tend to ripple through New York’s employment landscape. Data compiled by the New York Department of Labor show that employment in New York City’s “investment banking and securities dealing” sector has fallen significantly since before the financial crisis, recording a 20% drop between 2007 and 2014. This has muted the growth of the broader financial-services sector in the last few years, while total private employment in the city has increased more than 8% since 2007, buoyed by hiring in sectors like consulting and food and drinks.

Click here to access the full article on The Wall Street Journal. 

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