NEW YORK – Morgan Stanley is embarking on a fresh round of job cuts as rival banks sounded caution that a looming US recession will dampen hiring.
The banking giant will reduce its global workforce by about 1,600, amounting to roughly 2 per cent of the total, according to a source familiar with the matter. It had more than 80,000 employees at the end of the third quarter, compared with about 60,000 just before the Covid-19 pandemic began.
Meanwhile, Goldman Sachs and Bank of America executives warned of hiring slowdowns on Tuesday, citing the uncertain economic outlook.
Goldman chief executive David Solomon said smaller bonuses and even potential layoffs should come as no surprise amid a deal slump, while Bank of America CEO Brian Moynihan said the lender is slowing hiring as fewer employees leave, in an attempt to manage headcount.
BlackRock chief financial officer Gary Shedlin also said on Tuesday his company is freezing most hiring and reducing expenses.
The statements underscore the pain sweeping the United States, with layoffs and hiring freezes extending beyond the technology industry, where Facebook parent Meta, Amazon and Apple have begun shedding jobs or pausing hiring. PepsiCo is cutting hundreds of workers from its North American snack and beverage units.
“You have to assume that we have some bumpy times ahead,” Mr Solomon said in an interview. “You have to be a little more cautious with your financial resources, with your sizing and footprint of the organisation.”
Goldman’s business lines are closely linked to the economy, and the bank has forecast slowing growth ahead.
That would mean the bank will have to make some tough decisions, Mr Solomon said, especially since a soft landing is far from assured. He said the US could see a recession in 2023, even though the bank’s economists say it could still avoid one.
Goldman embarked on its biggest round of jobs cuts since the start of the pandemic in September, with plans to eliminate several hundred roles. The bank said in July that it planned to slow hiring and reinstate annual performance reviews – foreshadowing the job cuts it planned to undertake later in the year.
It is an effort to rein in expenses amid what it called a “challenging operating environment”.
“It shouldn’t be surprising to people – watching the performance of the business this year – that 2021 was an exceptional year,” Mr Solomon said. “2022 is a different year, and so naturally compensation will be lower.”
Wall Street is facing a tricky balancing act to keep a lid on total spending while preventing defections by its top performers.
“We seek talent all the time – we bring them in the company,” Mr Moynihan said. “We’re just more careful about it in times like this.”
The company is still hiring relationship managers in business and commercial banking, as well as financial advisers, private bankers and other employees in bank branches, he said. BLOOMBERG, REUTERS