As the banking industry braces for a potential recession in 2023, many wonder which sectors are at risk for reduction and which are hiring. In 2022, mortgage lending bore more of the right-sizing burden than other banking sectors due to dwindling demand caused by steadily jacked interest rates from the Federal Reserve. However, as banks prepare for what’s next, they may look to early movers for clues.
Early Movers and Potential Cuts
Goldman Sachs is set for a round of cuts that will encompass 3,200 employees. The cuts come too late to be reflected in the bank’s fourth-quarter results, released on Jan. 17th. Morgan Stanley let go of 1,600 employees in December, while Credit Suisse was set to cut loose 2,700 last quarter. Credit Suisse plans to cut as many as 9,000 roles globally over the next three years.
If we’re looking for clues further into the future, Goldman said more than one-third of its cuts will be from within the bank’s core trading and banking units. The bank’s president, John Waldron, called the economic forecast “challenging,” indicating a flexible view of staffing.
Importance of Staffing
Trimming the ranks of investment bankers is not a long-term strategy; however, squeezing more productivity out of them might be. Data from Coalition Greenwich showed that even though a set of 12 large banks counted the same number of “front office producers” in each time frame, banks took in $4.2 million per person in 2021 compared with less than $3 million per person in 2019.
At the same time though, income has jumped 40%. Some of that can be attributed to staffing up in tech. Tech in commercial banks had generally been thought of as relatively safe from cuts; however, recent events show there are always exceptions.
Banks will also see voluntary departures as talent becomes available elsewhere or executives pursue other opportunities within or outside their respective industries. One executive leading State Street’s crypto push left the bank to dive further into fintech while one executive tapped as a potential successor to CEO James Gorman left Morgan Stanley.
Prioritizing Hiring Top Contributors
Despite these changes and potential cuts across various banking sectors worldwide, hiring great people remains a priority for commercial banks, no doubt waiting to see what talent becomes available.
In conclusion, while it’s hard to predict which sectors will face reductions and which ones will continue hiring new talent, commercial banks clearly value having top contributors on their teams regardless of market conditions or industry trends. Finding ways to maximize productivity while investing in technology can help ensure long-term success even during uncertain times like those we currently face today.
Finding top talent remains crucial to commercial banking success. Let The Anderson Search Group help you in your search for the best.