Citigroup and Morgan Stanley Also Lay Off Employees... Wall Street Faces a Wave of Job Cuts

Citigroup Investment Banking Cuts Jobs
Morgan Stanley Drastically Reduces China Staff

(Photo by Bloomberg)

[Asia Economy Reporter Yujin Cho] As high-intensity interest rate hikes and recession concerns put a brake on overall financial investment activities, Wall Street in the U.S. is also entering emergency management through layoffs.

According to U.S. economic media CNBC on the 9th (local time), Citigroup, headquartered in New York, laid off 50 traders this week. Dozens of jobs were cut in the investment banking sector, which continues to experience sluggish trading. Citigroup's earnings in the investment banking sector, including initial public offerings (IPO), plunged 64% year-on-year in the third quarter due to continued market sluggishness.

Compared to tech giants like Meta and Twitter, the scale of layoffs is small, but CNBC reported that this move could be a signal of layoffs on Wall Street.

Morgan Stanley is also considering layoffs. According to three sources familiar with the matter, Morgan Stanley is expected to begin the layoff process within weeks. It is reported that they plan to significantly reduce staff in the Asia-Pacific region, especially in China and Hong Kong.

Earlier in September, Goldman Sachs announced layoffs of hundreds of employees based on the annual performance review reinstated earlier this year, and last month Deutsche Bank also reduced staff in its investment advisory division.

Credit Suisse, headquartered in Zurich, Switzerland, has also announced large-scale layoffs. Credit Suisse plans to cut 2,700 employees in the fourth quarter of this year and aims to reduce a total of 9,000 employees by 2025.

The tightening of funds due to high interest rates drying up cash in the market has dealt a direct blow to the performance of investment banks. According to financial information firm Dealogic, the scale of IPOs in the U.S. market last month was $1.6 billion. This represents a 95% decrease compared to the same period last year and is the smallest scale since 2011. Due to ongoing market sluggishness amid recession concerns, companies preparing for listing postponed their IPO timing.

The mergers and acquisitions (M&A) market, which enjoyed a record boom last year, has also fallen into a slump. With aggressive benchmark interest rate hikes causing red lights for fundraising, the total scale of M&A deals completed in the U.S. from September to October was $219 billion, a 43% decrease compared to the same period last year.

The U.S. Federal Reserve (Fed) raised the benchmark interest rate by 0.75 percentage points in a single move earlier this month, marking the fourth consecutive 'giant step,' pushing the upper limit of U.S. interest rates to 4.0%, the highest level since 2008.

Fitch Ratings estimated that due to these interest rate hikes, U.S. companies will have to bear additional interest expenses of at least $200 billion (approximately 282 trillion KRW) this year and next year.

This content was produced with the assistance of AI translation services.