The redundancy hangover from 2012
As we move into 2013, it may seem appropriate to hope that the future will be brighter and the investment banking layoffs of 2012 are a thing of the past. Sadly, this is not the case: 2013 is a year in which many of the banking layoffs announced in 2012 will be implemented. Worst, they may be implemented before bonuses are paid in the first quarter.
Bank by bank, these are where things stand in terms of redundancies announced and implemented.
Barclays Investment Bank: Barclays Investment Bank has made very few cuts so far, reducing its headcount only marginally throughout 2011 and in early 2012. However, this could all change in 2013. As we noted in a previous article, CEO Antony Jenkins is due to announce his strategy for Barclays in February. There have been suggestions that 3,500 investment banking layoffs could result. However, in mid-December the Wall Street Journal claimed to have spoken to Barclays insiders who put the layoff number at 2,000 for 2013.
Bank of America: In September 2011, Brian Moynihan said he wanted to cut 30,000 jobs at Bank of America, reducing the bank's headcount from 287,000 to 257,000 by 2014. In September 2012, the Wall Street Journal claimed to have spoken to a Bank of America employee who predicted headcount at the bank would total 260,000 by the year end. If this turns out to be the reality when BofA announces its end of year results in mid-January, then its employees can breathe a sigh of relief: their jobs will be safe.
BNP Paribas: In November 2011, BNP Paribas announced plans to cut 1,400 jobs from its Corporate and Investment Bank (CIB). In November 2012 the bank said that 90% of its investment banking redundancies had been completed. With luck, therefore, investment banking jobs at BNP Paribas are now secure.
Citigroup: 2013 will be a year of cuts at Citigroup. In early December, the bank said it planned to cut an additional 11,000 jobs. 1,900 of these cuts will affect the Institutional Clients Group (which includes investment banking and transaction services). Of these, 950 will come from operations and technology. The remaining 950 jobs will go from areas of low profitability, “like cash equities,” Citi said.
Credit Suisse: In 2011, Credit Suisse announced its intention of cutting 3,500 jobs worldwide across the business as a whole. When the bank announced its third quarter results in October 2012, it emerged that 1,500 jobs had already gone from the investment bank. Unfortunately, this may not be the end of the job losses at CS - alongside the third quarter results, Credit Suisse CEO Brady Dougan announced another CHF1.5bn of cost savings. Dougan declined to say whether this would result in additional job losses, however.
Deutsche Bank: Deutsche Bank announced 1,900 redundancies in July 2012. In September, the bank said it planned to cut 900 front office investment bankers with a focus on equities professionals and corporate financiers in the EU and APAC before December. In 2013, Deutsche has said its focus will instead be on cutting non-compensation costs. With luck, therefore, most of the job losses at Deutsche have already happened.
Goldman Sachs: Goldman first announced 1,000 redundancies in July 2011. Between the third quarter of 2011 and the third quarter of 2012, it went on to cut 1,600 people. Despite exceeding its target, Goldman decided additional cost cuts were necessary and announced a further $700m of cost savings in July 2012, without putting a number on the resulting job losses.
HSBC: HSBC initially planned to cut 30,000 people out of 267,000. By November 2012, 29,300 of these had already happened. However, Stuart Gulliver stood up in early November and said additional cuts may be necessary, suggesting there could be more layoffs at HSBC in 2013.
JPMorgan:In October 2011, JPMorgan said it would make 1,000 layoffs from its investment bank. Between the third quarter of 2011 and the third quarter of 2012, it cut 731 investment bankers. In November 2012, JPMorgan CEO Jamie Dimon said there would be no more layoffs at the bank, suggesting jobs at JPMorgan might be safe in 2013.
Morgan Stanley: Morgan Stanley announced 1,600 job cuts in December 2011. It's not clear how many of these have been completed, but most of the bank's sales and trading redundancies had apparently happened by July. Nevertheless, 2013 will be a difficult year for Morgan Stanley and further cuts may yet transpire in the bank's fixed income business.
Nomura: In September 2012, Nomura said it wanted to achieve an additional $1bn in cost reductions, with $500m of costs to be taken out of the European business. However, Nomura said that only $250m of these cost reductions would come from the payroll and didn't specify the number of layoffs that would result. Numerous redundancies were made shortly after the announcement. With luck, Nomura's cuts are now over.
Société Général: Like BNP Paribas, SocGen has already made most of its investment banking redundancies. The bank announced plans to cut 1,580 jobs in January 2012. It invited applications for voluntary redundancies, but was overwhelmed with applications. From this we deduce that most cuts have already happened.
UBS: In October 2012, UBS announced a 'strategic acceleration from a position of strength' - roughly translated as 10,000 redundancies over the next few years. Several thousand of these job cuts took place almost immediately as London-based fixed income traders were let go. Unfortunately, plenty more are yet to happen in the months to come.