Hi. Aaron Weinman here. Performance reviews are back. Hiring has slowed. And Wall Street’s most influential CEOs, from Goldman Sachs’ David Solomon to JPMorgan’s Jamie Dimon, are poised to weed out underperforming staff.
It’s a change from this time last year, when junior bankers saw big pay rises, deals soared to record highs and investment bankers braced for some of the biggest bonuses. more important than they have ever received.
According to this Bloomberg story, however, the layoffs aren’t expected to be as severe as what Wall Street experienced after the stock market crashes of 1987 and 2008.
Insiders say most of the cuts should be limited to investment banking underperformers, who are really feeling the pinch from weak deal flow in equity capital markets and advisory services. As Insider previously reported, mortgage units are also exposed to job cuts.
Before we get to that, though, it’s also time for our banker of the week!
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1. Wall Street executives see the job cuts as a return to the banking life cycle: Eliminate your weakest links to ensure the well-oiled machine keeps running with new talent for an evolving business.
For many, the return of staff cuts is a kind of return to normal. In capital markets, 2020 and 2021 trading volumes were always going to be a rarity. Record sales in the bond market, a deluge of initial public offerings thanks in part to the boom in special purpose acquisition companies (SPACs) and trillions of dollars in private equity cash have meant happy days for bankers. mergers and acquisitions in 2021.
But it came to an abrupt end.
In today’s world of rising interest rates, slowing growth and stubbornly high inflation, some bankers have fewer trades to execute. While many have strong work pipelines, the reality is that this is not enough to justify current staffing levels.
After all, bank CEOs are accountable to their shareholders and must do what it takes to cut expenses and improve their stock prices.
Here are some stories from the Insider team on Wall Street and the ongoing layoffs:
In other news:
2. Credit Suisse is considering splitting its investment bank into three parts, according to the Financial Times. The proposal would split the bank’s advisory business, which could be split off, a “bad bank” to hold riskier assets, and the rest of the business.
3. Startup founders: Beware of the “buyout clause” when taking money from venture capitalists. It could be the end of you, according to a transaction lawyer.
4. The U.S. Securities and Exchange Commission will let Wall Street retain the order payment stream, according to Bloomberg. The decision is a win for brokerages who are paid for retail stock transaction processing fees.
5. FTX is in talks to raise up to $1 billion at a valuation of around $32 billion, CNBC reported. Sam Bankman-Fried’s crypto shop already enjoys investment from companies such as Singapore’s Temasek, Tiger Global and SoftBank’s second Vision fund.
6. Late-night emails, wasted weekends, and crazy workloads. Toxic managers create a burnout crisis, and no amount of vacation can fix a poor work-life balance.
7. The US Federal Reserve is considering a possible housing market correction as a way to bring prices back to a more sustainable level. After years of searing prices, a correction can help improve housing affordability, according to Fed Chairman Jay Powell.
8. Private equity employees often earn six-figure salaries, even at entry level. Here’s how much staff at companies like Blackstone, KKR and Bain Capital bring in across the board.
9. An exclusive Miami island is getting a slew of $30 million+ condos — and you have to be invited to buy them. Related Group and its partners have closed the last parcel of developable land on Fisher Island.
10. And here is our Friday banker of the week. Meet Don McCree, Vice President and Head of Commercial Banking at Citizens Financial Group.
I met McCree this week at the official launch of Citizens in New York. McCree has been busy making acquisitions for HSBC bank branches along the East Coast, and this week Citizens hosted a series of events across Manhattan.
McCree has helped Citizens complete six acquisitions over the past five years, and he’s very optimistic about New York reopening. He also hopes the bank can capitalize on requests from small businesses across the city, which need new banking partners.
Check the full story here.