Layoffs Watch ’11: Credit Suisse/UBS/Morgan Stanley/Et Al

Did your firm increase base pay in the last couple years? Then you and/or the guy/girl to your right might be getting laid off.

Back in 2009, when out-of-sight Wall Street bonuses became public enemy No. 1, bankers dealt with the problem in their own ingenious way: They significantly raised salaries and deferred bonus payouts. Those moves helped defuse (or, at least, confuse) the mob, but now they’re coming back to bite the banks. That’s because the salary increases have left the banks with elevated fixed costs at a time of stagnant revenues. The situation, J.P. Morgan Chase & Co. analyst Kian Abouhossein pointed out in a report Tuesday, is a formula for “material staff cuts.”

The cuts could be most severe at Credit Suisse and UBS, which appear to have the highest fixed compensation costs. At Credit Suisse, 81% of compensation costs are fixed, Mr. Abouhossein said, and at UBS the figure is 63%. That’s a big change from just two years ago, when 63% of Credit Suisse’s compensation costs were fixed and 55% at UBS…Morgan Stanley also could be in a “tight spot” and require restructuring, particularly in its fixed-income trading division, Mr. Abouhossein wrote. Morgan Stanley has invested heavily in trading over the past couple of years, installing new management and hiring some 400 sales and trading staffers to recapture business lost to bigger banks. It typically takes time for this sort of recruiting effort to pay off, and it certainly doesn’t seem to have yet for Morgan Stanley, which generated only half as much trading revenue last year as industry leaders like Deutsche Bank or Goldman Sachs.

[Crain’s via BI]

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22 Responses to “Layoffs Watch ’11: Credit Suisse/UBS/Morgan Stanley/Et Al”

  1. NAKED_long says:

    It’s a zero sum game, baby! In order to double pay for MD’s you have to kick out 10 dudes from back office.

  2. Guest says:

    The JP Morgan analyst said: “I predict material staff cuts at all of the big investment banks…  Oh wait, crap.”

  3. Guest says:

    Fuck, I just bought a new suit.

    –UBS fixed income trader

  4. strategery says:

    Firing each of their CEOs with no severance package would be a good start in reducing fixed costs.

    – Guy who’s just sayin’

  5. Judge Smails says:

    Well, the world needs ditch diggers too.

  6. Guest says:

    at UBS 63% of compensation costs are fixed.  The other 37% simply don’t exist

  7. Guest says:

    Love the pitchfork inflow every time a google news alert goes off for “banker layoffs” on Macbooks in Starbucks across the country (and in the UK too, judging by the above). 

  8. Guest says:

    just extend the date at which you pay employees by 7 years, then it’s not a “technical layoff”

    -Wolfgang Schaeuble 

  9. Bear says:

    Dont layoff people at MS — just move them to work on legacy system in middle/back office! That’s more painful and fair! 

  10. Ryan1997msco says:

    Dude, Morgan Stanley sucks….let em all go…worthless…..