XM does not provide services to residents of the United States of America.

Crisis jolts Wall Street bankers already resigned to tough job market



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>Crisis jolts Wall Street bankers already resigned to tough job market</title></head><body>

By Tatiana Bautzer

NEW YORK, April 5 (Reuters) -Wall Street bankersface an increasingly gloomy job market after last month's banking crisis worsened an already bleak outlook for pay and staffing.

The failure of two U.S. banks - Silicon Valley Bank and Signature Bank -shook confidence in the industry and prompted government intervention to protect the financial system. That turbulence may prompt banks to pare back their lending and slow economic activity, according to industry experts.

The increased risks come after a lackluster 2022, when rising interest rates,inflation and the fallout from the war in Ukraine prompted consumers and companies to pull back on spending, bringing downthe volume of initial public offerings,share and debt sales as well as mergers and acquisitions.

Bankers' bonuses, which are partly determined by revenue from the deals they strike, fell accordingly.

Executives had started to forecast a revival in capital markets in the second half of this yearwhen the failures of the lenders roiled bankstocks and prompted Swiss regulators to orchestrate a takeover of ailing lender Credit Suisse Group AG CSGN.S.

One likely consequence of the turmoil is that banks tightentheir lending standards, which could further hinder dealmaking - making the prospects for jobs and compensation on Wall Street more gloomy.

"It's not a dire scenario, but banks are paring back the excesses from the last years and feel they are moderately overstaffed," said compensation consultant Alan Johnson, who owns a consultancy that specializes in Wall Street pay.

Bankers are also more cautious about future U.S. economic growth as the housing market slows due to higher interest rates curbing demand for mortgages. U.S.consumers are starting to fall behind on credit cards and auto loans in greater numbers, even though delinquencies are still low by historic standards.

An economic slowdown also translates to fewer deals, and raises the prospect of banks cutting jobs in addition to offering smaller bonuses.

The banking crisis will further squeeze the industry "if it creates a credit crunch and hinders dealmaking," Rahul Jain, deputy comptroller for New York, whose office collects taxes from Wall Street for state coffers, told Reuters.

Jain expects bonuses for 2023 to stay flat or shrink by 15%, saying "anything better than that would be good news for New York state and city budgets."

Annual banker bonuses, which are typically paid in the first quarter, had already dropped sharply for 2022.

Bonus payouts for employees in the securities industry in New York fell 26% to an average of $176,700 in 2022 from a record $240,400 in 2021, according to a report from New York State Comptroller Thomas DiNapoli last week.

The industry accounts for 22% of the state's tax collections, and is linked to one in every 11 jobs in the city, the comptroller said.


EXTREMELY CAUTIOUS

Compensation was even lower for U.S. investment bankers, whose bonuses shrank about 30% to 50% from 2021as deals dried up, estimated Johnson. Commercial bankers' bonuses in the United States fell about 20%, he said.

Traders at U.S. banks bucked the trend, in some cases receiving modest gains in variable pay as trading activity flourished in volatile markets last year.

Now, financial industry workersare fretting not only about pay, but job security. Even before the March crisis, Goldman Sachs Group Inc GS.N had laid off more than 3,000 people and Morgan Stanley MS.N cut about 1,600 staff. Both banks declined to comment.

One person with knowledge of Goldman's policies said the bank had resumed annual performance reviews that were suspended during the pandemic. The Wall Street giant typically cuts about 5% of its lowest-performing staff as part of the process.

Other banks, including BNY Mellon and HSBC, are also trimming their workforces, sources familiar with the plans havesaid.

Banks have mainly been adjusting their staffing levels by not replacing employees who leave, said Johnson.

Headcount for banks and financial services fell 5% to 10% in the first quarter from a year earlier, estimated Max Kemnitzer, managing director for banking and financial services at PageGroup, a recruitment consultancy.

Banks have been "extremely" cautious on pay this year, and have chosen to make cuts on the weakest areas likes IPOs and M&A, said Kemnitzer.

Investment firms, such as hedge funds and private equity firms companies, as well as financial technology companies are increasingly attracting talent away from banks, Kemnitzer said.

While there are plenty of reasons to be glum, Wall Street workers are enjoying one silver lining after the pandemic: greater flexibility in structuring their workday.

Even among the companies with the strictest return-to-office policies, employees are being given some options - whether it is working from home one day a weekor flexible hours to support commitments outside work, Kemnitzer added.



Reporting by Tatiana Bautzer; editing by Lananh Nguyen and Deepa Babington

</body></html>

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.