Hi. This is Aaron Weinman. Performance reviews are back. Recruitment has slowed. And Wall Street’s most influential bosses, from Goldman Sachs’ David Solomon to JPMorgan’s Jamie Dimon, are poised to cut underperforming employees.
It’s a shift from this time last year, when junior bankers hit big pay hikes, trading record highs and investment bankers hit some of the biggest bonuses they’ve ever received.
According to this story from Bloomberg, the layoffs shouldn’t be as severe as what Wall Street experienced after the market crash of 1987 and 2008.
According to the insiders, most of the cuts should be limited to weaker performance in investment banking, which is really hurting the pinch from weak deal flow in equity capital markets and advisory services. As Insider previously reported, mortgage lenders are also facing job cuts.
But before we get into that, it’s time for our banker of the week!
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A man carries his things in a box. Getty Images
1. Wall Street executives see job cuts as a return to the banking lifecycle: Weed out your weakest links to ensure the well-oiled machine keeps running with fresh talent for a growing company.
For many, the return to downsizing is a return to normal. Trading volumes have always been a rarity on the capital markets in 2020 and 2021. A record bond market sell-off, a flurry of initial public offerings partly due to the SPAC (Special Purpose Company) boom and trillions of dollars in private equity cash for M&A bankers in 2021 were after happy days.
But that stopped with a screeching halt.
Today’s world of elevated interest rates, slowing growth and stubbornly high inflation have meant that some bankers have fewer deals to make. Although many have a solid supply of work, the reality is that this is not enough to justify current staffing levels.
After all, bank CEOs have a duty to their shareholders and must do whatever it takes to cut spending and improve stock prices.
Here are some stories from the Wall Street Insider team and upcoming layoffs:
In other news:
A law firm has sued Credit Suisse over allegations that it misled investors into deals with Russian oligarchs. Fabrice Coffrini/AFP via Getty Images
2. According to the Financial Times, Credit Suisse plans to split its investment bank into three parts. The proposal would split the bank’s advisory business, which could be turned off, the “bad bank” into holding riskier assets and the rest of the business.
3. Startup Founders: Beware of the “buyout clause” when accepting money from venture capitalists. According to a business lawyer, this could be your end.
4. According to Bloomberg, the US Securities and Exchange Commission will allow Wall Street to maintain one payment flow per order. The ruling is a win for brokers, who are being paid for the rights to handle retail stock trades.
5. FTX in talks to raise up to $1 billion at valuation around $32 billion, CNBC reported. Sam Bankman-Freeze’s crypto business already features investments from the likes of Temasek, Tiger Global and Singapore’s Softbanks Second Vision Fund.
6. Late-night emails, ruined weekends, and insane workloads. Toxic managers are causing a burnout crisis, and no vacation can fix a bad work-life balance.
7. The US Federal Reserve sees a possible correction in the housing market as an opportunity to bring prices back to more sustainable levels. After years of hot prices, a correction could help boost home affordability, says Fed Chair Jay Powell.
8. Private equity professionals often make six-figure salaries, even at entry-level. There are many employees here at companies like Blackstone, KKR and Bain Capital at all levels.
9. An exclusive island in Miami is getting more than $30 million condos – and you need to be invited to buy them. Related Group and its partners have closed the last renewable land on Fisher Island.
Don McCree, Vice President, Citizens Bank Citizens
10. And here’s our Friday banker of the week. Meet Don McCree, Vice President and Head of Commercial Banking at Citizens Financial Group.
I sat down with McCree this week as Citizens officially launched in New York. McCree has been busy closing 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 is very optimistic about reopening New York. He also hopes the bank can capitalize on inquiries from small businesses across the city that need new banking partners.
See the full story here.
Curated by Aaron Weinman in New York. tips? E-mail [email protected] or tweet @aaronw11.