Global financial institutions reduced their workforce by around 60,000 people in 2023.
The Times reported that this is one of the most significant personnel reductions since the 2008 global financial crisis, and it reflects a significant reversal of the aggressive recruiting sprees seen during the epidemic recovery.
Investment banks, the engine of Wall Street dealmaking, bore the brunt of this decline.
Fees fell for the second year in a row, owing to a drop in mergers and acquisitions as well as initial public offerings, which adversely damaged their revenue streams.
These organizations used personnel cutbacks as a main means of cost control to protect profit margins.
According to a Financial Times investigation, the recent incorporation of Credit Suisse into UBS significantly clouded the scene. This consolidation resulted in the immediate removal of at least 13,000 positions, with further significant employment cuts likely.
These substantial employment losses in the financial industry highlight the vulnerability of the post-pandemic recovery and its uneven impact across businesses.
The repercussions are likely to extend beyond Wall Street, potentially affecting ancillary services and local economies worldwide.
“In most banks, there is no stability, no investment, no growth — and there are likely to be more job cuts,” said the owner of financial services headhunting firm Silvermine Partners, Lee Thacker, adding, “There are some very nice gifts being sent to bosses at the moment.”
According to Financial Times estimations, twenty of the world’s largest banks will shed at least 61,905 positions by 2023. This contrasts to almost 140,000 job cuts made by the same firms during the 2007-08 global financial crisis.
The FT compiled the figures using business disclosures and its reporting and did not include smaller banks or minor staff cutbacks, so the overall total of job losses in the sector will be larger.
Previous years of widespread bank job losses, such as 2015 and 2019, were impacted by large-scale cuts at European institutions failing to cope with historically low interest rates. However, at least half of the reductions in 2023 came from Wall Street bankers, whose investment banking divisions have struggled to keep up with the speed of interest rate rises in the US and Europe.
According to the article, many of those lenders are pulling back on hires made following the epidemic, when pent-up demand for dealmaking created a competition for talent among investment banks.
The largest cuts by a single institution, however, came from Switzerland’s UBS as it began to absorb its former rival.
