Photo: Bloomberg TV screenshot
Everyone is talking about the looming layoffs across Wall Street.Yesterday Deutsche Bank announced that it’s laying off 1,900 employees with 1,500 hundred of those coming from its investment banking division.
And they’re probably not going to be the only one.
According to bank analyst Meredith Whitney, who was on Bloomberg TV yesterday, there will be massive layoffs street-wide of about 50,000 and lower compensation across the board, too.
She said that’s a good thing, too.
Just last week, Whitney told CNBC’s Maria Bartiromo that the market will reward banks that shrink their staff and their business.
This morning on Bloomberg Surveillance BlackRock’s Bob Doll echoed Whitney’s comments saying there are too many people working in the U.S. banking system right now and firms will continue layoffs.
“There’s still a slow, steady process of where companies are upgrading, thinning out and trying to become more productive. I don’t think that’s going to be over for some time,” Doll said.
Doll added that there’s also an overcapacity in the banking sector.
“There are a lot of people that have come on to this scene in the last bunch of years and we just don’t need as many of them as we do.”
The reason, he explained, is leveraging was a once powerful source for revenue growth at banks and really don’t have that anymore. He added that deleveraging only makes it work in the opposite direction.
“The financial sector as a percentage of our economy in terms of employment will not be, in my judgement, anywhere close to where it was. We’re retrenching.”