Financial sector layoffs rise, more cuts ahead

NEW YORK Tue Jun 21, 2011 4:48pm EDT

The Wall Street sign is seen outside the New York Stock Exchange, March 26, 2009. REUTERS/Chip East

The Wall Street sign is seen outside the New York Stock Exchange, March 26, 2009.

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NEW YORK (Reuters) - U.S. financial firms have been cutting staff dramatically this year, with more layoffs expected to come from Wall Street, according to a report on Tuesday.

Unlike the widespread layoffs stemming from the financial crisis of 2008 that was followed by hiring when markets recovered, the 2011 reductions appear to be more permanent.

Challenger, Gray & Christmas, an employment consulting firm, said the financial sector has outlined 21 percent more job cuts so far this year than it did in 2010. Banks, insurance firms and brokers have outlined plans to eliminate 11,413 positions through May, according to publicly available information cited by Challenger, compared with 9,431 during the same period a year ago.

Wall Street has long been characterized by fickle hiring patterns, but John Challenger, head of the consulting group, said new cuts reflect fundamental changes in the business structure and returns of financial firms.

"They will not be as profitable in the future as they were in the past," he said. "That means they're just not going to be able to afford the workforce levels that they had when they were more profitable."

Most cuts to date have occurred in retail banking operations, reflecting subdued economic activity and loan growth. Mergers have also led to headcount reductions as smaller regional banks combine forces.

However, Challenger expects layoffs at large investment and commercial banks to accelerate through the rest of 2011.

Regulatory restrictions and declines in trading volume have challenged the business models and profitability of large investment banks such as Goldman Sachs Group Inc and Morgan Stanley.

Goldman reported an annualized return on shareholders equity of 15 percent during the first quarter, adjusted for special items, compared with more than 30 percent before the crisis erupted. Morgan Stanley, which now has a 20 percent return-on-equity target, delivered an annualized ROE of 6.2 percent in the first quarter.

Wall Street stocks have fallen along with profits in recent months. Goldman shares are down 19 percent so far this year, and Morgan Stanley's are off 17 percent. The KBW Bank Index of large-cap financials is down a more moderate 8.8 percent.

(Reporting by Lauren Tara LaCapra; editing by Andre Grenon)

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Comments (2)
squidcutter wrote:
You don’t really believe that “Robbed Cossacks” concerted media’s P.R.,
pushed by GS on Friday, June 17th were reliable ?!
Read Financial Times on their \”books\”. They’ve just finished world’s metals take over,
started squeezing (criminal) and went shopping Russia’s assets from theit prefered oligarch Putin,
through his Madve-boy. Poor Huns.
By the way, there are stubborn rumors as if GS & JPM’s
“Jamie and Lloyds” bought Andy’s “Psalms Book”, their daily non-stop P.R.,
and his (and Cohan’s) next “2 Big 2 Smell 2″, acting role and T.V. serie ?!
So this friday’s trap was too coordinated a plan for a sensitive eye. N.Y.T.’s Susanne Craig got a detailed anonymous (why?) $1 billion and 10% cuts plus lay-offs-plan that was too polished to be true.
W.S.J. (Shira Ovide) and Christine Harper of Bloomberg “won”, for a balance I suppose, some very suspicious “Atlantic Equities” brutal estimate cut of Goldman

Jun 21, 2011 4:58pm EDT  --  Report as abuse
squidcutter wrote:
They just took over and squeeze the world’s metals, and went shopping Russia’s assets from their prefered Oligarch- Tyrant Putin and his Madve-boy.
GS’ financial reports show they hide huge unbelievable trade profits – “not to lead with the chin.” Just spin and move on. Throw carefully these Lowman, Gupta, Rajaratnam and Tourre to the sea, play the victim, cry and complain. Read on JPM’s amazing Ms.”commodities” Masters how are their manipulative HFT algorithmic trade profits.

So We shall see an outstanding “Profits’ Laundering” of very suspicious HFT algorithmic daily trade. This is the new financial crisis moving forward.

AS I wrote before (Seeking Alpha Blog, “A very sick S.E.C. needs E.R. – Market poisoning by a squid”) “On Tuesday, April 19th, Mr. B.’s filed GS Quarterly Reports. They are smart: “Don’t lead with the Chin”. Just spin and move.
So exactly the day before, they had rushed secretly and unexpectedly to early repayment (!!) returns of 5.5 Billions’ Loan to good old Warren Buffett, who rescued them at the crisis, when they couldn’t breathe, like the late Lehman Bros., Bear, Merrill, etc. They didn’t miss an opportunity to “Crowd Out”, at the midst of hell.

That (W. Buffett’searly repayment) is why G.S.’s revenues and profit dropped half in their updated quarterly reports but still are much higher than the Annalists’ expectations.”

$8 Billion “Receivables” – That is the explanation why Goldman Sach’s latest quarterly report reveals that the firm has over $8 billion assets it lists as “receivables from customers and counterparties.” A year ago, it reported it had just $1.8 billion of these kinds of assets. What’s going on here? When you “postpone” or cover cash income of $6 billion as if “receivables” – that’s what happen.

$100 Billion US Treasuries – The same explanation relates to another question, big time, why “Goldman Sachs dramatically increased by $15 billion – to $100 billion. Even Pimco’s Bill Gross sold them and shorts them heavily, cutting its exposure to debt issued by the US government and government-sponsored agencies like Fannie Mae and Freddie Mac in the first quarter of this year, apparently bucking the trend of some of the biggest bond traders to short US Treasuries”
… Those Trading “Banks”, each reporting $100 Million daily net trade profits easily (how exactly?!) were just tickled to laugh by those $1 Million State – fines.” “M & A , advisory fees and debt underwriting” are negligible. The big big money is this HFT aggressive daily trade. That is why they chose Lloyds – read Cohan’s – Lloyds is “The Trader” of the family.
Check also those Private Equity secret (non public) funds, and those hundreds of Parasite Partners (‘Goldman’s Diaspora”) updated wage, fees, payments and bonuses, whatever. Lloyd’s income as CEO grew 15 times (yes, 1500%) last 2 years. To be continued

Jun 21, 2011 5:08pm EDT  --  Report as abuse
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