Wall Street plans to get smaller this summer. Faced with weak markets and uncertainty over regulations, many of the biggest firms are preparing for deep cuts in jobs and other costs.
The cutback plans are emerging even as Wall Street firms have mostly recovered from the financial crisis and are reporting substantial profits again. But those profits are not as big as they were before the crisis, and it is expected that in the coming months it will be even more difficult for firms to make money. Worries about debt in Europe and the shape that the Dodd-Frank financial overhaul rules will ultimately take are prompting banks to act.
“It’s a tense environment right now,” said Glenn Schorr, an analyst with Nomura.
Even Goldman Sachs, Wall Street’s most profitable firm, is retrenching. Senior executives at Goldman have concluded they need to cut 10%, or $1 billion, of noncompensation expenses over the next 12 months, according to a person close to the matter. The big pullback will cause Goldman employees to re-examine every aspect of their business.
Bank of America is also likely in the next few months to cut some staff members from its securities division, according to a senior executive. Credit Suisse is in the process of identifying people to cut in its investment banking unit, a source said.
Morgan Stanley is expected to cut at least 300 low-producing brokers in its wealth management division this year and has announced plans to cut $1 billion in noncompensation expenses over the next three years. NYT