From the outside, it might seem as if all is back on track, post-financial crisis, on Wall Street. After all, banks have again begun reporting large profits amid a flurry of glaring media coverage. A new tech bubble has created splashy IPO after splashy IPO. But for the banks there are some thunderclouds looming on the horizon: The European debt crisis, for instance, is worrisome, with Greece getting messier by the day. What the Dodd-Frank regulations will mean for the banks isn’t totally clear, but they won’t boost profits, that’s for sure.
As a result, DealBook reports, some of the largest Wall Street firms plan to thin their herds. Goldman Sachs will cut 10 percent of “noncompensation expenses” over the next year, and some of that would probably come from layoffs. Morgan Stanley will reportedly cut 300 from its wealth-management division. Credit Suisse and Bank of America are also mulling how and what to cut. Barclays, ahead of the curve, laid off 600 employees in January. Cuts are coming slightly earlier than usual — rather than following the usual end-of-summer (or end-of-the-year) timeline — since, now that banks pay less of an employee’s total compensation in bonus form and more in regular old paychecks, they’re forced to reevaluate the bottom line much earlier. Which actually seems a little kinder — nothing’s quite as bad when it’s sunny out, right? At least you can drown your sorrows, and spend your severance, outside.
Wall Street Braces for New Layoffs as Profits Wane [DealBook/NYT]