Except for JPMorgan Chase, the nation’s largest and most profitable bank, lenders have collectively shed 20,000 positions in response to challenges posed by increased interest rates impacting the mortgage sector, Wall Street deal-making, and funding costs, based on official filings.
In a year marked by unexpected economic resilience, the largest American banks have discreetly undertaken substantial staff reductions, with more anticipated
The largest American banks witnessed a two-year employment surge during the COVID-19 pandemic, driven by heightened Wall Street activity. However, with the Federal Reserve’s interest rate hikes to temper an overheated economy, banks found themselves overstaffed for a landscape with diminished demand for mortgages and reduced corporate debt issuance.
According to Chris Marinac, Research Director at Janney Montgomery Scott, these cuts are a cost-saving response to an uncertain 2024. Marinac warned that deeper reductions loom on the horizon due to rising defaults on corporate and consumer loans.
Wells Fargo and Goldman Sachs have made the most significant workforce cuts, reducing staff by roughly 5% this year as they grapple with revenue declines. Wells Fargo’s strategic shift away from the mortgage business in January triggered these cuts, and further reductions are expected. CFO Mike Santomassimo confirmed that a few areas of the company will be exempt.
Goldman Sachs, after multiple rounds of cuts, asserts that it has now reached an optimal workforce size. Nevertheless, further downsizing is planned, particularly due to the firm’s shift away from consumer finance.
Despite Bank of America experiencing a 1.9% dip in headcount, the company has hired 12,000 new employees, indicating a substantial number of departures
Citigroup, one of the largest American banks while maintaining a stable staff count, is undergoing significant internal changes, with 7,000 identified job cuts. In stark contrast, JPMorgan, one of the largest American banks has expanded its workforce by 5.1% this year, propelled by branch network expansion, technology investments, and the acquisition of First Republic. Despite this growth, the bank still has over 10,000 open positions.
CEO Jamie Dimon‘s adept leadership has distinguished JPMorgan, enabling it to thrive in the current high-interest rate environment. While its peers face challenges, JPMorgan stands out with notable share price growth.
Marinac underscores the need for these institutions to adapt to the evolving economic landscape, emphasizing that further adjustments may be necessary in the quarters ahead.
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