Layoffs on Wall Street surged in September while new hiring for the same month dropped to lowest level seen since the spring. Despite this fact, the overall employment picture at financial services during the third quarter continues to improve.
September 2015 Challenger, Gray & Christmas Report
According to the Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs surge more than 120% to 1,025 layoffs from 461 layoffs announced in August. The September 2015 layoff figure represents a 73% rise from the 591 layoffs reported during the same month last year. Despite this fact, year to date layoffs of 21,070 remain 14.4% lower than the 24,623 level seen over the first 9 months of 2014.
New hiring in September was also weak as financial services firms announced a paltry 300 new jobs were available, following a robust 1,975 new jobs in August. Over the first nine months of this year, new hiring on Wall Street has totaled 7,136 jobs – up over 160% from the 2,729 new jobs announced during the same period in 2014.
As you can see from the above chart, monthly layoffs and new hiring data are extremely volatile data series. However, since early 2013, layoffs have clearly trended lower. This is consistent with quarterly data which shows that layoffs have fallen from 33,819 layoffs in Q1 2013 to 4,593 in Q3 2015. In addition, layoffs have consistently fallen the past three quarters – from 8,556 in Q1 2015 to current levels. New Hiring, on the other hand has been much flatter, rising from 2,177 in Q1 2013 to 2,791 in Q3 2015.
Wall Street Layoff Announcements
Deutsche Bank management announced that it plans to cut 25% of its workforce or roughly 23,000 jobs through layoffs mainly in technology roles and by spinning off its PostBank division. That would reduce the firm’s workforce to around 75,000 full-time positions. The bank unveiled a broad restructuring plan in April but co-chief executives Anshu Jain and Juergen Fitschen quit shortly thereafter. John Cryan, the new CEO appointed in July, was left with the job of finalizing and implementing the plan.
Bank of America announced that it would implement a round of layoffs as part of the bank’s latest cost cutting efforts. The WSJ reported that the layoffs could affect “a couple of hundred jobs” according to sources close to the matter. Rumors suggest that legacy Merrill Lynch employees working in sales and trading have been told to clean out their desks. Earlier in September, CEO Brian Moynihan warned that the Bank would report a 5% decrease in 3rd Qtr trading revenue. He noted at the time that if trading revenue didn’t rebound he would have to continue cutting costs.
During September, regional bank BB&T announced that it would lay off 89 back office employees located in Lancaster County, Pennsylvania effective in early November. This layoff is a result of management eliminating duplicate positions which came about of BB&T’s acquisition of Susquehanna Bancshares which became effective on August 1st.
Our Take
The weakness in September layoff and new hiring data suggests that some firms at least have not completed right sizing their operations. Obviously, some firms like BofA or Deutsche Bank are still trying to implement cost cutting plans appropriate with current market conditions.
As we have said for most of the past year, we don’t expect that many investment banks and independent research firms will aggressively try to grow their headcount of analysts or salespeople. However, it is interesting to note that a number of headhunters in Europe have said that regional investment banks are currently trying to fill open positions with more experienced analysts and salespeople in order to prepare their firms for potential unbundling.