News from the Financial Associated Press, Shanghai, December 7 (edited by Huang Junzhi)As the economic outlook becomes increasingly uncertain and the shadow of recession hangs over the United States, following large-scale layoffs by large technology companies, the “wave of layoffs” has now spread to Wall Street: Morgan Stanley and Goldman Sachs were exposed to layoffs, and Bank of America announced a slowdown in recruitment.
According to people familiar with the matter, Morgan Stanley, a well-known Wall Street investment bank, cut about 2% of its employees on Tuesday, affecting about 1,600 of the bank’s 81,567 employees and affecting almost all business areas. The latest company-wide layoffs at Morgan Stanley were in 2019.
Goldman Sachs Chief Executive David Solomon also warned on Tuesday that the firm may have to cut jobs in some areas and be cautious about its financial resources amid growing economic uncertainty.
On the same day, Bank of America CEO Brian Moynihan also said that the company is slowing down its hiring as fewer and fewer employees decide to leave, trying to control the number of employees before the economic downturn.
The above statement also means that the big banks have resumed a practice that Wall Street suspended during the new crown epidemic: eliminating underperforming employees at the end of the year.
Before the outbreak, Wall Street banks usually laid off 1% to 5% of employees they considered the worst performers before paying year-end bonuses, and paid more salaries and bonuses to the remaining employees. However, after a two-year boom in trading activity triggered by the outbreak of the new crown epidemic in 2020, the investment industry paused this practice, but it has largely ground to a halt against the backdrop of aggressive interest rate hikes by the Federal Reserve this year.
Layoffs are spreading
The comments also underscore the pain of layoffs and hiring freezes engulfing the U.S. and extending beyond the tech industry. Facebook parent Meta, Amazon and Apple have already laid off or suspended hiring.
“You have to assume that we’re going to have rough times ahead. You have to be a little more careful with financial resources and so forth,” Solomon said in an interview.
Goldman’s business is closely tied to the economy, and the bank expects slower growth ahead. Solomon noted that means the company will have to make some tough decisions, especially as a soft landing for the economy is far from certain.
He said the U.S. could experience a recession in 2023, although Goldman Sachs economists had previously said the U.S. could still avoid one.
In September of this year, Goldman Sachs launched the largest round of layoffs since the outbreak of the epidemic in 2020, planning to eliminate hundreds of positions. The bank said in July it planned to slow hiring and resume annual performance reviews – setting the stage for job cuts it plans to make later this year.
“Looking at the performance of the business this year, people should not be surprised that 2021 is an unusual year. And 2022 is a very different year, so naturally the pay will be lower,” he added.