Layoff Carnage Is Back On Wall Street -- Here's How It Got So Bad Again

i was a swiss bankerOn the horizon: layoffs.

This fall has not been good for Wall Street jobs, and if some predictions are right, it’s only going to get worse.Let’s start with why this is happening. Meredith Whitney gives 5 reasons:

  • There’s a state budget crisis
  • Banks’ revenues are horrible right now
  • Banks’ spending grew faster than their revenues
  • Banks are over-staffed
  • She predicts an ugly Case-Schiller number in October

You can see why Whitney predicts that the fourth quarter is going to be hell and that layoffs will begin in the first quarter.

Unfortunately, for many, the hell has already begun.

In early September, Meredith Whitney--the banking analyst turned Wall Street predictionist-- estimated that the financial industry would cut 80,000 jobs over an 18-month period.

Judging from the scale of recent companies' layoffs, Whitney's prediction might be on its way to becoming true.

But then it kind of started to come true.

You're about to see that eight major Wall Street firms are cutting jobs while others are implementing a hiring freeze or asking employees to find other jobs.

JP Morgan is cutting jobs, probably in response to FinReg.

At least 50 people were cut from commodity sales and prop trading teams.

The bank decided to shut down all prop trading desks because of FinReg, so job changes were expected.

JPMorgan told the traders to find other jobs.

Things are similar at Goldman Sachs. People are losing jobs, but again, it's because of FinReg.

Goldman's New York proprietary trading desk has been acquired by private equity company Kohlberg Kravis Roberts & Co. On Sept. 3 Goldman told at least 65-70 prop traders to find new jobs as the bank increases efforts to diminish their prop trading units in light of new financial regulations.

As a side note, a hotel owned by Goldman Sachs is laying off 250 people, but the firm isn't making any cuts, necessarily.

And Morgan Stanley announced a hiring freeze...no layoffs, yet...

Morgan Stanely also isn't handing out any pink slips, but it has announced a hiring freeze.

Source: Bloomberg

Unfortunately, other firms aren't faring so well.

RBS cut thousands of jobs in September.

Number of layoffs: 3,500 jobs, 2% of staff was reported initially. Now, it may be up to 10%.

Department: Technology and administration

Reason: To reduce costs

Additional source: The NYT

And then Bank of America cut 5% of its i-banking staff

The same week, the huge quant hedge fund DE Shaw cut staff

Number of layoffs: 400 people, 10 per cent of staff.

Department: All levels, including partners and portfolio managers

Reason: The funds assets under management dropped by about half. (SOURCE US) And maybe - a failed New Mexico community that DE Shaw planned in 2006 and will put them in $100 million of debt.

Additional source: the Wall Street Journal

Followed days later by cuts at Knight Capital, a NYC brokerage firm

Number of layoffs: 8% of workforce

Department: Unknown

Reason: Unknown

Additional Source: Fox Business

Then Standard Bank announced job cuts, too

Number of layoffs: 15-20% of London jobs

Department: All levels

Reason: To reduce operating costs

Source: Here is the city

The cuts keep continuing with Britain's Lloyds bank cutting 4,500 jobs

Number of layoffs: 4,500 jobs

Department: 2,750 UK roles in IT and operations and another 1,750 cuts in India

Reason for layoffs: Unknown

Source: The Sun

Citadel laid off 5% of sales and trading recently, ~13 employees

Number of layoffs (to come): 5% of sales and trading group

Department: Sales and trading group

Reason for layoffs: Trading losses? The downfall of Citadel Securities?

Source: FIN Alternatives

Or Deutsche Bank?

Number of layoffs (to come): Up to 5% in the next month or so

Department: Global markets workforce

Reason for layoffs: Unknown

Source: Here is the city

Man Group

Number of layoffs: As much as 10% of workforce

Department: Sales department

Reason for layoffs: Merger with GLG

But despite all these layoffs, firms are still hiring...

Many firms are still hiring everyone's least favourite trader. Guess who.

...as long as you're a high frequency trader or have a Ph.D.

Recruiters said banks are looking for high frequency traders, or in Goldman Sachs' case, quantitative analysts with a Ph.D.

Check out 11 Smoking Hot Physicists Wall Street Should Hire Right Now >

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