The largest US banks that hired over 100,000 more people over the past three years ago are now cutting jobs. In Switzerland, is there a calm before the storm?

More than 11,000 banking jobs are likely to be cut this year at the largest US financial institutions, with Citigroup this week becoming the latest major US bank to announce massive job cuts, saying it said it will axe 5,000 jobs by the end of the second quarter, mostly in investment banking and trading.

Thousands of bank employees at Goldman Sachs and Morgan Stanley were affected by job cuts, as reported by the «Financial Times» (behind paywall). Bank of America has so far tried to avoid layoffs but plans to cut 4,000 positions through attrition, while JP Morgan has yet to announce any large-scale layoffs.

Pandemic Hiring Spree

The axe rather than a scalpel is being applied as major financial institutions attempt to reverse a hiring spree. As the economy recovered from the Covid 19 crisis, banks dramatically increased their workforces to cope with the boom in trading.

Tight labor markets during and after the pandemic had prompted companies to offer their employees generous bonuses for continued employment while aggressively recruiting, fearing they would lose out in the talent war.

Massive Job Growth

At the end of the first quarter, the five banks that dominate Wall Street - JP Morgan, Bank of America, Morgan Stanley, Goldman Sachs, and Citi - together employed a record 882,000 people globally. Compared to the end of March 2020, it represents an increase of over 100,000 employees.

In 2022, the number of employees in New York's securities industry increased by nearly 6 percent, the most in at least 20 years, according to data from the state comptroller's office.

Wait-and-See Switzerland

The Swiss banking industry has so far been spared major job cuts. At the end of May, the ten largest banks and banking groups in Switzerland together had just over 1,000 job openings.

However, the situation is different at UBS and Credit Suisse. Before the merger, the two big banks employed around 36,000 people in Switzerland, but many jobs will fall victim to the merger. Depending on how the integration progresses, industry observers believe that one in three employees at Credit Suisse or UBS could lose their jobs.