It's hardly surprising that Wall Street is bracing for layoffs, writes Andrew Ross Sorkin in the Dealbook. He goes on to say "the European debt crisis is rocking the markets. New regulations are crimping bank profit centers. And smaller bonuses are sending other compensation costs soaring.... Now, fixed costs like salaries make up a higher portion of their expenses. So layoffs are starting to look more attractive."
The article continues with a likely scenario that banks will "fire low-performing employees rather than simply reducing their bonuses," said Robert J. Jackson Jr., who served after the financial crisis as a deputy to the Treasury's pay czar, Kenneth R. Feinberg.
It remains to be seen how deeply Wall Street will have to cut. Kian Abouhossein, an analyst at J.P. Morgan Cazenove in London, says the layoffs could be painful, given the enormous fixed costs the firms face.
In the latest of a string of high-level departures to hit Swiss banking giant UBS, its head of global mergers and acquisitions has defected to become a partner at New York-based boutique Moelis & Co. [WSJ]
Jefferies Group Inc., the first U.S. investment bank to report second-quarter results, said its profit fell 3.8% from a year ago. Higher compensation expenses and weaker stock trading offset record quarterly revenue in investment banking. [WSJ]
Investors are asking for more of their money back from hedge funds in June than in any other month in 2011. [Reuters]