• 28 Jul 2011 at 12:21 PM

Layoffs Watch ’11: How Much Will Firing You Save the Shareholders?

By

Credit Suisse. Earnings. Not so great. Net income CHF 768 vs 1bn estimates, investment bank net revenues down 31% y-o-y and 43% q-o-q. Like its next-door neighbor gnomes, CS is most saddened and disappointed by the efforts of its investment bank. Wall Street analysts are pretty bummed too:

“The investment bank is a catastrophe,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets who put the stock “under review” today. “After the financial crisis, Credit Suisse expanded the investment bank but then the hoped-for volumes didn’t materialize.”

Which means that some Credit Suisse bankers will be dematerialized. To the tune of 2,000 layoffs firmwide.

Looks like Layoffs Season 2011 is well underway. So far CS, UBS and of all people GS have announced planned cost-cutting measures and put some numbers (both financial and body-count) around them. We looked at the stats**:


The CS and UBS numbers make sense – the savings per employee are right in the zip code of average annual comp (based on accruals so far / no particular reason to believe these reflect actual expected comp). The GS number seems like an outlier: the savings are 2.5x average employee comp. Three possible explanations:

1. GS’s projected savings come from “comp and non-comp” expenses, so perhaps much of those savings are driven by cup rather than personnel downsizing

2. Maybe GS’s savings are coming disproportionately from cutting the heavy hitters, and the junior mistmakers will be spared this round.

3. Or maybe 1,000 layoffs at GS is a little conservative?

** Based on public filings. All of GS is treated as investment bank. UBS “personnel expenses” include minor non-comp expenses.

Comments (22)

  1. 1
    Posted by Wllax34 | July 28, 2011 at 4:37 PM

    UBS paying more annualized comp than GS. attaboy

  2. 2
    Posted by Calvin harris | July 28, 2011 at 4:42 PM

    these posts. my mind. hurt

  3. 3
    Posted by DingALing | July 28, 2011 at 4:46 PM

    Goldman is a relatively smaller company than the other two if I’m not mistaken. So wouldn’t cutting a similar amount of people at a smaller firm u00a0have a larger impact?u00a0

  4. 4
    Posted by Fruity Mint Puffcake | July 28, 2011 at 5:04 PM

    look at it per employee, dumbass

  5. 5
    Posted by deal_mkr | July 28, 2011 at 5:16 PM

    I thought the whole point of Matt coming to work at Dealbreaker was so that he could nn-stop looking through filingsn-write funny stuffnnthis post is fail on both counts. go back to banking

  6. 6
    Posted by Anonymous | July 28, 2011 at 5:21 PM

    At first, I also found it curious given the “talent caliber.” But then, I realized even the mentally challenged don’t like staying in a festering cesspool.

  7. 7
    Posted by Guest | July 28, 2011 at 5:38 PM

    Are you a riTard or something? nn- Alan

  8. 8
    Posted by THEBro | July 28, 2011 at 5:46 PM

    exactly! nn-Kouwe

  9. 9
    Posted by Anonymous | July 28, 2011 at 6:15 PM

    GS headcount at the end of 2006 was 26,467.u00a0 Quite frankly I’m surprised it is as high as 35k now.u00a0 Some of it can be chalked up to absorbing acquired lines of business and supporting their new incarnation as a bank, but still…

  10. 10
    Posted by DingALing | July 28, 2011 at 6:42 PM

    Sorry, I was only attracted to the highlighted area at the bottomnn-Former Lehman Quant

  11. 11
    Posted by serious question kinda | July 28, 2011 at 7:06 PM

    Est run rate savings = $1247mmnreported layoffs at CS = 2000nSavings per layoff = 1247mm/2000u00a0nu00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 u00a0 = 623knnHow did he get $500k?

  12. 12
    Posted by InfiniteGuest | July 28, 2011 at 7:16 PM

    Bringing lower-cost contractors onto the payroll reduces your reported compensation per employee and also lowers non-compensation costs, both of which look good under the circumstances.

  13. 13
    Posted by Billy Ray Valentine, Capricorn | July 28, 2011 at 7:20 PM

    look, if you spend years working on excel for at least 10 hours a day 5 days a week you have a hard time letting go.u00a0

  14. 14
    Posted by Anonymous | July 28, 2011 at 7:30 PM

    Getting the math wrong on your boring tables and charts when you were hired to be funny IS the NKI

  15. 15
    Posted by Anonymous | July 28, 2011 at 7:41 PM

    Matt: is that Times New Roman 8 or 9 point? Plus how did you do the blue highlight thingy?

  16. 16
    Posted by Ray Finkle | July 28, 2011 at 8:04 PM

    You failed when you didn’t use Arial Narrow 9/10… Back Office

  17. 17
    Posted by AIG Quant | July 28, 2011 at 8:27 PM

    It’s called a highlighter.

  18. 18
    Posted by Anonymous | July 28, 2011 at 8:38 PM

    My highlighters are all yellow. Do they come in other colors now?nn-S&P Analyst, we’re always the last to know

  19. 19
    Posted by Anonymous | July 28, 2011 at 11:35 PM

    Are you referring to the $464,414? (Rounded to $500K)nn-guy who is a stickler for detail

  20. 20
    Posted by serious question kinda | July 28, 2011 at 11:42 PM

    no.. Matt retroactively fixed his chart..

  21. 21
    Posted by Anonymous | July 28, 2011 at 11:48 PM

    ah- sorry – I’m late to the Dealbreaker party today

  22. 22
    Posted by Not Matt's Mom | July 29, 2011 at 1:21 PM

    I thought it was decent. He isn’t as funny as Bess but I found this to be interesting.