Wall Street expands workforces even as CEOs talk of cutbacks

The biggest U.S. banks are continuing to add to their workforces even as executives from Wall Street firms Goldman Sachs Group and Morgan Stanley talk of scaling back amid a slump in dealmaking and capital markets.

Goldman, Morgan Stanley, Citigroup, JPMorgan Chase and Bank of America all reported third-quarter headcounts that were up from the previous three months and a year earlier. Of the six largest banks, all of which reported financial results in the past week, only Wells Fargo cut the size of its staff, with a 5.8% reduction from a year earlier.

Goldman Sachs HQ
Workers arrive at Goldman Sachs headquarters in New York.
Michael Nagle/Photographer: Michael Nagle/Bloo

"We continue to make steady investments in our people, technology, marketing and financial centers," Bank of America Chief Financial Officer Alastair Borthwick said on a conference call with analysts Monday.

With Wall Street profits hurt by a drop-off in mergers and acquisitions and declines in stock and debt sales amid tumultuous markets — and even more pain to come should the U.S. slip into recession, as many economists are predicting — some firms have hinted at staffing cutbacks.

"Obviously we're looking at headcount," Morgan Stanley Chief Executive James Gorman said Friday, while Goldman Sachs is embarking on its biggest round of jobs cuts since the start of the COVID-19 crisis, with plans to eliminate several hundred roles, people with knowledge of the matter said last month.

"We have a process that we do every year where we look at bottom performers," Goldman CEO David Solomon said Tuesday in an interview with CNBC. That was halted during the pandemic, and resumed this fall, he said, adding that the cuts entail a "small" number of "people that we don't think are working in their jobs."

Read more: Goldman's Fixed-Income Traders Help Counter Bleak Quarter

Still, Goldman reported adding 2,100 employees in the third quarter, making for a 4.5% growth in its workforce from the previous three months and 14% from a year earlier — the biggest increase from 2021 among the largest U.S. banks. The expansion reflects "the timing of campus hires and investments in growth initiatives," the New York-based firm said in its third-quarter results.

Morgan Stanley, meanwhile, added 3,181 workers in the third quarter, expanding its staff 4.1% from the previous three months and 11% from a year earlier.

"You've got to take into account the rate of growth we've had in the last few years," Gorman said on his company's third-quarter conference call. "We've learned some things during COVID about how we can operate more efficiently. So that's something the management team is working on between now and the end of the year."

In New York City, the securities industry saw its peak employment in 2000, before the global financial crisis, with the workforce now 10% smaller, according to New York State Comptroller Thomas DiNapoli. Last year, city employment in the industry totaled 180,000, little changed from 2020, he said in March.

Bank of America reported an additional 3,446 employees in the third quarter, making for a 1.8% increase from a year earlier, while JPMorgan increased its headcount by 9,980 in the three months, giving it an 8.5% annual gain.

Meanwhile, at Wells Fargo, the workforce was reduced by 14,662 people from the third quarter of last year. CFO Michael Santomassimo, during a conference call Friday, touted the cuts as a way for the bank to control costs.

"Excluding operating losses, our expenses would have been down on a year-over-year basis for six consecutive quarters," Santomassimo said. "Another way you can see the impact of our efficiency initiatives is through lower headcount, which has declined for nine consecutive quarters."

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