It’s a trend that we reported last year, that Wall Street's largest investment houses were moving jobs out of the city to cheaper regions of the country such as Salt Lake City and North Carolina. The front page of today’s New York Times says the shift is threatening the vast middle tier of positions that form the backbone of employment on Wall Street. According to the Times article, the move comes even as banks consider deeper staff cuts here, which could undermine the state and city tax base over the long term.
"Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs," James Malick, a partner at the Boston Consulting Group who advises banks on relocation told the Times.
Consultants say they have seen a sharp pickup in this trend, known as near-shoring, in the last year. Goldman Sachs even boasted of the cost savings that relocating jobs can bring in a presentation to investors in late May.
"Some functions need to stay in the United States but they don't need to be in New York City or near the client," Malick said. And with most investment giants facing anemic revenues and more stringent regulation that cuts into lucrative trading revenues, relocation is more tempting than it was before the financial crisis.
Low-level jobs have already migrated to call centers and back offices overseas, while top-end traders and bankers are secure in the New York area, experts say. Instead, services like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, the Research Triangle of North Carolina, and Jacksonville, Fla.
Barclays says it will launch an independently led audit of business practices as its chairman, Marcus Agius, resigns, taking responsibility for last week's $453 million Libor settlement of an interest-rate manipulation probe. [Wall Street Journal]
Tudor Investment Corp. opened a $500 million hedge fund, its first new fund to bet on macroeconomic trends in a decade. [Bloomberg]
The unemployment rate in the eurozone's 17 nations rose to a record 11.1 percent in May, the highest level since the euro launched as a common currency in 1999. [CNN Money]
J.P. Morgan, which could lose up to $9 billion from what started out as a $2 billion trading loss, has received a $10 billion subsidy in the form of lower borrowing costs. [Businessweek]
GE Capital Sells Property Lending Unit for $2.51 Billion. [DealBook]