Citigroup, one of the major US banks, recently announced that it will be cutting 5,000 jobs, contributing to a total of 15,000 job cuts on Wall Street this year. According to the Financial Times, Citigroup plans to eliminate these positions by the end of the second quarter. This comes as experts warn about the challenging job market that Wall Street is currently navigating, which is said to be one of the most difficult since the 2008 financial crash. Other major banks, such as Goldman Sachs, Morgan Stanley, and Bank of America, have also announced significant reductions in their workforce.
Citigroup’s job cuts primarily affect its investment banking and trading departments. The bank’s Chief Financial Officer, Mark Mason, revealed that the severance costs associated with these layoffs would increase expenses by as much as $400 million in the current quarter. Mason emphasized the bank’s commitment to cost reduction and stated that reducing headcount is sometimes necessary.
Citigroup’s trading revenue has declined by 20% this quarter, largely due to the negative impact of the Congressional debate on the debt ceiling on client activity. The bank’s investment banking division has also experienced a 25% decline, in line with the broader industry. Mason attributed these challenges to the concerns surrounding the debt ceiling, which have influenced investor behavior.
The job market on Wall Street is currently facing significant difficulties, with approximately 15,000 job cuts already recorded. Max Kemnitzer, Managing Director for banking and financial services at recruiter Michael Page, described it as one of the most challenging job markets since the 2008 financial crisis. Metrics such as job availability, resume-to-interview conversion rates, and interview-to-offer conversion rates have been sluggish. Goldman Sachs has eliminated 3,200 jobs in the first quarter, with reductions occurring in its New York, London, and Hong Kong offices. Morgan Stanley plans to cut around 3,000 jobs this quarter, while Bank of America aims to eliminate 4,000 positions by the end of June.
Bank of America has attempted to avoid redundancies by not rehiring for positions when employees leave, but it still plans to reduce its workforce by 4,000 employees, which constitutes 2% of its staff. JPMorgan Chase, one of the dominant banks on Wall Street, has not announced any large-scale job cuts yet. The combined workforce of the five major banks that dominate Wall Street, including Citi, Morgan Stanley, JPMorgan Chase, and Bank of America, currently stands at 882,000 employees, a 100,000 increase compared to March 2020.
The hiring spree that took place last year has come to a halt, with managers now being more cautious about making new hires. Wall Street’s investment banks have suffered from a decline in deals as market volatility and rising interest rates have made investors more cautious.
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