As uncertainty puts pressure on economic activities, capital market activities such as takeovers and public offerings are slowing on Wall Street, while big US banks lay off their employees to reduce costs.

Banks, struggling to find new employees due to job shortages experienced during the Covid-19 pandemic, are trying to reduce employment quickly this year.

As of the end of March 2020, the five largest banks in the US – JP Morgan Chase, Bank of America, Morgan Stanley, Goldman Sachs and Citi – hired 100,000 people and employed more than 800,000 people, more than never.

WAR, INTEREST, FEAR OF RECESSION, ENERGY CRISIS…

After a record year of profits and employment in the sector in 2021, the war in Ukraine, the rapid increase in official interest rates, the fear of recession and the energy crisis in Europe worry investors.

While banks are laying off mainly investment bankers as uncertainty puts pressure on economic activity, experts rate the job market in the financial sector as one of the toughest job markets seen since the 2008 financial crisis.

IPO volume is 74 percent lower than a year earlier, according to calculations by data provider Dealogic. The once lucrative market has sometimes come to a complete standstill.

According to data from research firm Refinitiv, revenue from global businesses like acquisitions and sales is about 16 percent below last year’s level in 2023. Financial institutions in particular are negatively affected by slowing activities in these areas.

HIRE THE EXPERTS

Due to these events and the slower recovery of the capital markets, financial institutions are making changes to their employment policies.

Financial institutions trying to adapt to the requirements of the times are seeking artificial intelligence (AI) experts to benefit from the innovations and productivity gains brought by technological developments. These organizations are still trying to employ managers and bankers in important areas.

Banks, which offered generous offers in 2020-2021 to keep their employees from leaving for the competition, are saying goodbye to investment bankers as the downturn in the capital markets sector lasts longer than expected.

While 11,000 employees have lost their jobs this year at the major US banks alone, human resources experts estimate the number of layoffs at the nation’s top banks will reach 15,000 by the end of the year.

Job openings are no longer automatically filled, according to human resources experts, who say the job market is tougher than it has been in 15 years.

Also, the fact that bankers are no longer as willing to change jobs as they were in the business years makes it difficult for some banks to plan to reduce their workforce without layoffs.

DESIGNS CONTINUE

The latest layoff news came from JPMorgan Chase & Co, after Goldman Sachs, Morgan Stanley and Bank of America previously announced waves of layoffs.

According to the Bloomberg report, JPMorgan Chase & Co has laid off about 40 investment bankers in the United States.

Goldman Sachs’ number two name, John Waldron, spoke about an “extraordinarily difficult” macroeconomic situation at a conference he attended earlier this month, emphasizing that the bank was preparing for a “more challenging environment.”

Planning the third round of layoffs in less than a year, Goldman Sachs shed hundreds of jobs in September last year and laid off 3,200 employees, representing 6 percent of its workforce, in the first quarter. This figure drew attention as the bank’s biggest cut since the 2008 financial crisis.

It is estimated that Goldman Sachs may lay off about 250 people in the coming weeks, including senior banker positions.

Morgan Stanley, a major US bank, announced in May that it would lay off 3,000 people, or 5 percent of its workforce.

Bank of America also announced that it plans to lay off 4,000 employees by the end of June.

Citigroup, one of the big banks, announced that it will say goodbye to its 5,000 employees, mainly in investment and retail banking, at the end of June. Mark Mason, the bank’s chief financial officer, cited weak jobs and technological advances that have allowed the bank to manage with fewer employees.

BUSINESS IS ALSO SLOWING DOWN IN EUROPE

Deutsche Bank, Germany’s largest bank, has announced plans to cut 800 jobs as it becomes the first major European investment bank to warn that business is slowing significantly.

Credit Suisse, one of Switzerland’s biggest banks, which was hit hard in mid-March and was taken over by rival UBS in an emergency sale, is a special case in Europe.

As news circulated that the bank plans to lay off thousands of employees, UBS boss Sergio Ermotti said there will be a massive downsizing at Credit Suisse. (AA)