The financial sector is set to shrink its headcount to reflect sliding valuations that have reached their lowest ratio to the S&P 500 since 2009, according to a Bloomberg report . Net revenue at BofA, JPMorgan Chase, Citi, Wells Fargo, Goldman and Morgan Stanley are expected to drop 3.7% in Q2, the fourth year-over-year decline in five quarters. Experts including Meredith Whitney expect this trend will result in Wall Street job cuts in upcoming months.
"You don't have to be a scientist to figure out that tighter regulation and more onerous capital rules without economic growth will shrink the industry. It has to," one analyst told the news agency.
The article continues: "The number of U.S. financial-industry jobs dropped for the fourth straight year to an average of 7.63 million in 2010, according to the Bureau of Labor Statistics. That's 8.4 percent below the 2006 peak, and the figure fell to 7.61 million in May. New York City lost about 14,600 jobs in investment banking, securities dealing and brokerage in the year ended Nov. 30, according to the New York State Department of Labor."
Evidence of these predictions are highlighted in a separate Bloomberg story which says Morgan Stanley is likely to slash additional jobs in its wealth management unit, which recently cut 300 workers earlier this year. Further, Barclays may reduce headcount by as many as 50 in its equities division.
The pace of advisory firm M&A has picked up with advisers themselves doing most of the buying. [Investment News]
France's AXA Private Equity will buy various Citi assets for $1.7 billion. [WSJ]
A Russian government-owned bank has established a private equity fund with a former Goldman banker in charge and Putin as rainmaker. [NY Times]
Boutique UK investment bank Evercore will buy rival Lexicon Partners for $141 million, creating a 75-banker organization. [DealBook]
Last year 1 in 10 U.S. companies that held an IPO did so outside of the United States. [NY Times]
Buyout firms are repeatedly beaten in takeover auctions by cash-rich corporations. [Bloomberg]
Investors clearly prefer to pay commissions for the financial advice they receive than a fee based on assets under management. [Investment News]
UBS considers moving some of its units to Manhattan from Connecticut to attract top employees and clients. [NY Times]
Blackstone is selling its 50% stake in Universal Orlando to give Comcast full ownership of the theme park. [AP]
TPG Capital and Carlyle Group are in talks about purchasing a stake in Reliance Communications's mobile-phone towers unit. [BusinessWeek]