"Banks will think cut costs, cut costs, cut costs"
Whether you're a vice president about to lose your job at Goldman Sachs, a managing director ejected from HSBC, or you're out at Bank of America, Morgan Stanley or Citi, your chances of getting back in just crumpled.
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As bank stocks plummet, strategies will need to be rethought. At best, hiring is likely to be put on hold. At worst, thousands of new jobs could be cut.
"Banks will cut more," says Lee Thacker, owner of search firm Silvermine Partners. "There will be less deal-flow, M&A isn't coming back, private sponsors won't step in until they see the bottom. Banks will think cut costs, cut costs, cut costs."
Deutsche Bank, SocGen and BNP Paribas shares were all down 10% or more at one point this morning. On Friday, Citi's share price fell 9.5% at the open. The decline is likely to prompt a rethink. Deutsche Bank had already reserved the right to reconsider its strategy after missing cost targets; now it might have to think even harder still. At Citi, CEO Jane Fraser wants to achieve a return on equity of 12% by 2026, but even before tariffs roiled markets, she was only expected to achieve 9%. At Barclays, whose shares were down a mere 5% this morning, CEO CS Venkatakrishnan must either add £1.6bn to revenues or cut costs to meet his targets. US investment banking revenues were supposed to help Venkat out of that hole; this suddenly looks unlikely.
As senior bankers line up to reflect that the year suddenly isn't going at all well for banking deals, predictions are being rapidly revised down. Analysts at KBW predicted on Friday that investment banking revenues will fall 5.3% quarter-on-quarter in a stagnant market for IPOs and a difficult quarter for M&A. "There’s no way on God’s green earth I would recommend any fintech company go public right now," Steve McLaughlin, founder of boutique firm FTT Partners, told the WSJ last week. KBW predicted that debt capital market (DCM) revenues will hold up, but even this may be wishful thinking amidst stalling leveraged finance deals and plummeting high yield issuance.
For the moment, though, investment banking headhunters say their mandates to fill jobs aren't being pulled, although one said it's "50:50" that his current roles will actually be signed off at the final stage. Pre-liberation day, there had been a spate of hiring, with Barclays and others filling senior positions. "We had a great first quarter," says Logan Naidu, founder of London banking recruitment firm Dartmouth Partners. "There's still a bull case for hiring based on pent-up demand for deals from private equity firms, but how the next quarter plays out, we just don't know."
The New York State Comptroller's employment figures for the Securities Industry reflect what happens to banking headcount when markets crash. In 2001, 30,000 securities jobs were cut in New York State alone between August and October. During the financial crisis, a similar number of jobs in the state went between July 2008 and September 2009. Since then, however, the Comptroller says job cuts have been minimal. - By December 2024, New York Securities industry headcount was back to 30,000 people above its nadir of 2010.
Even if banks begin jettisoning jobs, some roles should be safe. KBW is predicting a 9.4% year-on-year increased in markets revenues at leading US banks during the first quarter, driven by rising revenues in macro (rates and FX) trading. Accordingly, macro headhunters say jobs in their market seem fine: "People I've spoken to are making money and if they're making money they won't be shedding jobs. This is the macro environment a lot of people have been hoping for, but it's a slight case of be careful what you wish for," says one.
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