Wall Street in All Directions... Global 500 Layoffs at BlackRock, the World's No.1

Total Workforce at 2.5% Scale

[Asia Economy Reporter Yujin Cho] BlackRock, the world's largest asset management company by assets under management, has not escaped the wave of layoffs spreading across Wall Street in the United States.

According to major foreign media on the 11th (local time), BlackRock, which manages $7.96 trillion, has decided to lay off 500 employees globally. The scale of the layoffs is about 2.5% of the total workforce of 19,990 employees (as of the end of Q3 last year). About one-third of those affected by the layoffs are expected to be U.S.-based employees.

CEO Larry Fink and Chairman Robert Kapito recently announced this workforce reduction plan in an internal memo. In the memo, the executives stated, "Due to the uncertainties surrounding us, it has become more important than ever to focus solely on our clients ahead of market changes." They added, "We will carefully manage costs and restructure investment strategies in an efficient manner."

[Image source=Reuters Yonhap News]

BlackRock's decision to reduce its workforce is interpreted as an effort to downsize its bloated structure and prepare for management difficulties through cost savings.

BlackRock significantly increased its workforce during the COVID-19 pandemic, a period when the stock market experienced an unprecedented boom, to expand its business. Following the COVID-19 crisis, unprecedented stimulus measures led to overflowing liquidity and funds with nowhere to go flowing into the stock and bond markets, prompting the company to grow its size in response to the surge in demand.

According to a report submitted by the company to the U.S. Securities and Exchange Commission (SEC), the total number of employees increased by 23% as of the end of Q3 last year compared to the end of 2019, just before the COVID-19 outbreak.

The market, which was enjoying an all-time boom, fell into an endless recession due to overlapping pressures from inflation and high interest rates caused by the high-intensity tightening policies of governments worldwide to curb it. As a result, BlackRock froze new hiring in October last year, citing deteriorating performance and a decrease in assets under management.

Bloomberg News analyzed that BlackRock's large-scale layoffs of global staff are a strategy to respond to challenges such as market sluggishness caused by this year's economic recession and interest rate hikes through cost reduction.

Global asset management firms, including BlackRock, suffered significant damage last year as bond markets experienced price crashes due to interest rate hikes. Consequently, BlackRock's assets under management decreased by 16% year-on-year to $7.96 trillion as of the end of September last year.

BlackRock's stock price also failed to escape a sluggish trend, falling more than 22% last year alone. The stock, listed on the New York Stock Exchange, closed at $755.92, down 0.18% from the previous session.

U.S. Wall Street firms have begun downsizing one after another to prepare for the risk of capital market recession caused by high-intensity tightening and economic slowdown. Goldman Sachs, a major U.S. investment bank (IB), has launched its largest-ever layoff of 3,200 employees since its founding, and is also cutting costs by selling private jets and reducing travel expenses and other ancillary costs.

The scale of Goldman Sachs' layoffs corresponds to about 6.5% of its total workforce, which had increased by more than 34% since 2018 to around 49,100 employees (as of the end of September last year). During the 2008 financial crisis triggered by the collapse of Lehman Brothers, Goldman Sachs laid off about 3,000 employees, approximately 10% of its workforce at the time.

Following Morgan Stanley's announcement earlier this month to lay off 1,600 employees, equivalent to 2% of its total workforce, Citigroup and Barclays have either already implemented layoffs or plan additional reductions within a few months.

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