Morning Coffee: Profiting From Layoffs
Layoffs and cost-cutting usually mean profits are under pressure. Not so with Wall Street. In fact, U.S. banks are raking in piles of cash. The problem is they’re unable to invest it in their workforce.
For the fiscal year that ended in June, the six largest U.S. lenders combined to generate roughly $63 billion in profit, dwarfing earnings reported by other, more financially-stable consumer-facing companies, according to Bloomberg. But poor returns on equity, escalating capital requirements, unsustainable gains and declining share prices have led them to slash jobs and cut costs.
And it won’t get better. Financial firms are bracing for stricter regulations soon to hit Wall Street and Main Street. A recent survey compiled by the Economist Intelligence Unit found that nearly one-third of companies with annual revenue over $10 billion expect to spend north of $10 million this year to comply with various government regulations, according to Financial News. Big banks are especially leery of what’s coming their way.
Those taking the brunt of the punishment are the suits and ties. The top six lenders announced roughly 40,000 job cuts in the first six months of 2012 and are expected to slash bonuses across the board.
Barclays and UBS, each ranked among the 100 best global brands in 2011, failed to make this year’s list. Morgan Stanley, which had a much less scandalous last 12 months, increased its brand value in 2012.
Amidst all the negative press surrounding i-banking, Wells Fargo has quietly increased its market share and fees on the back of several major U.S. deals.
Ann Marie Petach, chief financial officer at New York investment firm BlackRock, has been named the most powerful woman in finance by American Banker. Petach edged out Abigail Johnson, the presumptive future chief executive of Fidelity.
Commodities broker Marex Spectron named John Wall, a former global head of investment banking at UBS, chief executive officer. Wall said the London-based firm wants to grow in Asia and the U.S., areas where it currently has a small position.
The European Banking Authority will require banks to maintain capital equal to 9% of their risk-weighted assets in the event they are forced to absorb unexpected losses. The move will likely limit how aggressive banks can be with capital built up over the last year.
The private sector in the U.S. added 162,000 jobs in September, roughly 9,000 more than what was expected. The unemployment rate remained relatively unchanged.
New York’s Attorney General’s office, which this week filed a civil lawsuit against J.P. Morgan in response to its handling of risky mortgage-backed securities, plans to target other banks in the coming months.
|Buzz Around the Office
Sit back and enjoy the hilarity that ensues when novice bowlers forget one important action: letting go of the ball.
List of the Day: Job Search Advice
Here are a few quick pointers to maximize the time you spend searching for a job.
- Don’t shotgun blast job applications. Find the best roles for you and tailor your resume and cover letter accordingly.
- Social media may be your best job search tool. Use it.
- Whether after an interview or a networking session, always send a thank you note.