Tag Archives: Wall Street layoffs

State Street Corpse?

State Street Corp announced today that more layoffs were coming, all within this quarter. The bank fired 1,800 mid-to-upper-level managers (the type of folks who could afford houses in Greenwich) last December, but that was before it admitted today that it was sitting on $9 billion in worthless paper. Question: since much of this worthless junk was tied to Lehman, how long did State Street know that it had this little problem, and what finally forced it to fess up today?

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Advice to 240,000 fired Wall Streeters: Grow up and get a real job

Harsh reality from the head of Heidrick & Struggles.

Q. How bad is it for people working on Wall Street?

A. We haven’t seen anything like this in the financial services industry, particularly in investment banking but also in the capital markets area. The numbers change every day, but at the end of 2008 the number was that 240,000 had been laid off on Wall Street in an 18-month period. If you’re talented — and there are a finite number of individuals across every organization who are A-plus players — you won’t have any trouble getting a job. If you’re newer to the investment banking field, you’re going to have to look at different types of employment.

Q. Is it just people in investment banking losing jobs or is it also happening in other areas, like private equity and hedge funds?

A. It’s across the board. You haven’t seen private equity being hit as hard as investment banking or the hedge funds. I don’t think a day goes by when you don’t pick up a newspaper and see another hedge fund that’s closing. A lot of these individuals will either reinvent themselves in different areas of the hedge fund world or retire or do something completely different. Therein lies the challenge. What type of industries do you want to go into when you’re being compensated fairly heavily now?

Q. Where do those 240,000 people go?

A. There are a couple of things happening. When I say retool or reinvent yourself, some of the local investment banks in Chicago are recruiting people from New York. That just wouldn’t have happened a couple of years ago.

You’re also seeing people moving abroad. —

But it’s a supply and demand issue. The demand simply isn’t there for all 240,000.

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Q. If many of these people were skilled at building complex financial instruments that are no longer in demand, how can they use those skills in other industries?

A. You see a number trying to go back to school. You see a number trying to get into different areas. If you’re intelligent, there will be opportunities. It will just take much longer than it used to. At this time, it could take six to eight to nine months.

But it’s tough because the areas that are looking to recruit and grow right now are energy, things that deal with the environment, pharmaceuticals and some parts of high tech. It’s tough to make a transformation from trading credit-default swaps one day to going to work for a health care company the next. They have to discover what they want to do when they grow up.

Q. Are business schools teaching people to become investment bankers when the world doesn’t need investment bankers any more?

A. There is truth in that. I’m on the board of the Fuqua business school at Duke University, and we were just having this conversation at a board meeting. If you look at all the analytical tools they’re teaching at the University of Chicago or at Wharton, they’re teaching people how to become a great investment banker, but not necessarily how to manage and lead.

Those readers who have argued that Greenwich needs huge salaries to support last year’s prices and who warned that those jobs are disappearing would seem to have a point, eh?

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    Dreaming of a dark Christmas

    Alerted by CEA, I just Googled “layoffs” and the news isn’t encouraging. Credit Suisse is laying off 11% of its workforce and the rest of the industry’s doing no better:

    The majority of Credit Suisse’s planned reduction of 11% of its entire workforce, or 5,300 jobs, will target investment banking. That’s a division that includes stock and bond trading, and advisory services such as mergers and initial public offering issuance. Japan’s Nomura Holdings Inc. plans to lay off nearly a quarter of its 4,500 London staffers, in part due to overlap from its purchase of Lehman Brothers’ European equity and investment banking operations.

    On Wednesday, Jefferies Group Inc. said it would reduce 13% of its workforce by the end of the year, or about 300 people, with cuts heavier on the investment banking side. Deutsche Bank began handing out pink slips to about 900 workers the same day – about 15% of its global workforce – concentrating on downsizing its global markets division, which includes sales and trading operations.

    Last month, Morgan Stanley (MS) announced plans to lay off 2,000 employees globally by year end, or about 5% of its staff, focusing on its institutional securities business, which includes proprietary trading. Those cuts came on top of 4,500 layoffs that have occurred since 2007. Citigroup Inc. (C) made a pre- Thanksgiving announcement that it would shed 50,000 jobs worldwide by early 2009, including 25,000 that have not been laid off yet; combined with an earlier round of layoffs, the financial services giant will have 20% fewer employees than at its peak near the end of 2007.

    UBS AG said in October it is exiting its commodities business and cutting back in real estate and securitization, as well as in proprietary trading, a move that will result in 2,000 fewer jobs by the end of the year – on top of nearly 4,000 jobs that have been cut since the firm’s hiring peak in the third quarter of 2007.

    Even Goldman Sachs Group Inc.’s (GS) employees haven’t been spared; the firm should end the year with 10% fewer employees.

    These figures are for world-wide operations but New York is bound to be hit hard. And as New York goes, so goes Greenwich.

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