Investment banks Morgan Stanley, Citigroup, Bank of America, Goldman Sachs, and Deutsche Bank have announced plans to cut operating costs that include eliminating jobs. The cost cutting measures follow decline in trading and investment banking revenue in the second quarter due to reduced deal and trading volume. Chief among the reasons the investment banks attribute to decline in M&A and trading activity is the concern that Greece would leave the euro and the region’s sovereign-debt crisis would spread to other nations.
Morgan Stanley cuts pay pool for investment bank
The sixth-largest U.S. bank by assets, Morgan Stanley, paid a total of $3.53 billion in the first six months of the year to investment bank employees in salaries, bonuses and benefits. The amount was 15 percent lower from a year earlier. In addition, the bank plans to cut staff strength by another 700 in the second half of the year, bringing total 2012 staff reductions to 4,000. Morgan Stanley’s company wide compensation expense, the firm’s largest expense, was down to $8.1 billion for the first six months this year from $8.9 billion for the corresponding period in 2011.
Deutsche Bank to cut 1,000 investment bank jobs
Deutsche Bank is planning to cut about 1,000 jobs at its investment bank. The cuts will slash the bank’s investment banking staff by roughly 10 percent and will target senior investment banking and back-office jobs outside of Germany. The decision to cut jobs is somewhat of a surprise since bank officials said in April they had no plans to trim the investment banking division. However since April, many companies have either withdrawn or delayed their planned initial public offerings and other deals due to uncertainty surrounding Greece’s national elections and the Spanish bailout.
Citigroup to cut 350 more jobs in investment bank, trading
Citigroup plans to cut about 350 additional jobs this year from the securities division, which includes investment banking and trading operations. The reductions amount to about 2 percent of the unit’s staff. The company attributed the additional job cuts to the need to control expenses in light of weak market conditions. Back in January, Citigroup announced plans to cut 1,200 people to save $600 million this year at the securities and banking division.
Goldman Sachs to cut senior positions, hire junior employees
Goldman Sachs is embarking on a new round of cost cutting measures, which will include laying off some senior employees. The investment bank has increased its planned annual cost reduction target to $1.9 billion from the previously announced target of $1.4 billion. During the June quarter, investment banking revenue decreased 17 percent compared to the corresponding prior year quarter. The bank plans to cut senior positions, but it still plans to hire junior employees through channels such as regular campus recruiting.
Bank of America Plans $3 Billion in New Cost Cuts
Bank of America plans to slash costs by $3 billion annually in commercial lending, investment banking and wealth management. The bank did not detail planned job cuts in the latest round of the plan. It shrunk its workforce by approx. 12,000 at the end of June.