Banks shed 60,000 jobs in one of worst years for cuts since financial crisis

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Global banks eliminated more than 60,000 jobs in 2023, marking one of the heaviest years for cuts since the financial crisis and reversing much of their hiring as they emerged from the Covid-19 pandemic.

Investment banks suffered a second consecutive year of plummeting fees as dealmaking and public listings dried up, leaving Wall Street trying to protect profit margins by reducing headcount.

Elsewhere, the takeover of Credit Suisse by UBS has already resulted in at least 13,000 fewer roles at the combined bank, with further big redundancy rounds expected in the year ahead.

“There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts,” said Lee Thacker, owner of financial services headhunting firm Silvermine Partners, adding: “There are some very nice gifts being sent to bosses at the moment.” 

Twenty of the world’s biggest banks cut at least 61,905 jobs in 2023, according to Financial Times calculations. That compares with more than 140,000 jobs slashed by the same lenders during the global financial crisis of 2007-08.

Bar chart of Disclosed or reported reduction in headcount showing Global banks cut more than 60,000 job in 2023

The FT used company disclosures and its own reporting to compile the data and did not include smaller banks or minor staff cuts so the overall total of job losses in the sector will be higher.

Previous years of extensive job losses by banks, such as 2015 and 2019, were affected by large-scale cuts at European lenders struggling to cope with historic low interest rates. But at least half of 2023’s reductions came from Wall Street lenders, whose investment banking businesses have struggled to cope with the speed of interest rate rises in the US and Europe.

In many of those instances, the lenders are rowing back on hires they made coming out of the pandemic when pent-up demand for dealmaking sparked a war for talent between investment banks.

However, the biggest cuts by a single institution came at Switzerland’s UBS as it began to digest its former rival.

Within hours of Credit Suisse’s rescue in March, market watchers began predicting that the most significant banking merger since the financial crisis would result in tens of thousands of job cuts

Credit Suisse had already planned to slash 9,000 roles, but UBS was expected to cut further and faster as it removed duplicate positions and wound down much of its former competitor’s accident-prone investment bank.

In November, UBS disclosed that it had already cut 13,000 jobs from the combined group, leaving it with a total headcount of 116,000. But chief executive Sergio Ermotti has signalled that 2024 will be the “pivotal year” for the takeover and analysts expect thousands more jobs to go in the months ahead.

The second-biggest cutter of 2023 was Wells Fargo, which this month revealed it had lowered its global headcount by 12,000 to 230,000. The bank said it had spent $186mn on severance costs in the third quarter alone, with 7,000 jobs jettisoned.

Chief executive Charlie Scharf announced that the bank had set aside as much as $1bn for further severance costs, suggesting tens of thousands of more jobs are at risk.

The other big Wall Street lenders resumed their annual “reduction in force” redundancy programmes in 2023, having skipped a few years since the start of the pandemic.

Citigroup cut 5,000 jobs, Morgan Stanley shed 4,800, Bank of America 4,000, Goldman Sachs 3,200 and JPMorgan Chase 1,000. Collectively, the big Wall Street banks cut at least 30,000 staff in 2023.

“The revenues aren’t there, so this is partly a response to overexpansion. But there is also a simpler explanation: political cost-cutting,” said Thacker. “If you run a division and your boss asks for savings, you cut or you get fired.”

As recently as January 2022, Deutsche Bank chief executive Christian Sewing said he was “very concerned” that the competition to hire staff had driven up remuneration costs across Wall Street, where pay rose by almost 15 per cent over the previous 12 months.

But less than two years on, a dearth of dealmaking has forced lenders to streamline their investment banks.

Data from Coalition Greenwich, the financial services benchmarking group, showed the biggest investment banks cut back their staff by 4 per cent in the first half of the year alone, with more cuts coming in the second half of the year.

Yet the reductions were not as deep as the more significant falls in revenues, which Gaurav Arora, global head of competitor analytics at Coalition, said was due to banks being optimistic about a return to dealmaking in the new year.

“Some banks are hesitating at the moment because of the amount of dry powder sitting on the sidelines, especially in the Americas,” he said. 

While most of the staff reductions at global banks this year have affected less than 5 per cent of staff, the UK’s Metro Bank has announced plans to cut a fifth of its workforce.

Bar chart of Most 2023 cuts affected fewer than 5 per cent of staff showing Fifth of Metro Bank jobs under threat

The high street lender was rescued in a £925mn refinancing deal in October having run into trouble a month earlier after the Bank of England declined to grant it capital relief for mortgage lending until at least 2024, which resulted in a capital hole. 

Metro is now targeting annual savings of £50mn a year — up from a previous goal of £30mn — which will result in branch closures and the departure of up to 800 staff.

Some large banks did not cull staff in 2023, notably HSBC and Commerzbank, which have both undertaken huge workforce reductions in recent years.

Italy’s second-biggest lender UniCredit, which has also been reducing its headcount over the past two years as part of an efficiency drive, did not announce any big redundancy rounds in 2023.

Its full-time employees dropped by about 10 per cent — or 7,700 — in the two years to March and it set aside an additional €300mn of restructuring costs to help fund up to 1,000 voluntary departures.

Barring a swing back in investment banking activity, the outlook for global banking jobs is unlikely to improve in the coming year.

“We expect full-year 2024 to be a continuation of the story of 2023,” said Coalition’s Arora. “We see banks getting more conservative.”

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