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

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.

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22 Responses to “Layoffs Watch ’11: How Much Will Firing You Save the Shareholders?”

  1. Wllax34 says:

    UBS paying more annualized comp than GS. attaboy

    • Anonymous says:

      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.

  2. Calvin harris says:

    these posts. my mind. hurt

  3. DingALing says:

    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. deal_mkr says:

    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

  5. Anonymous says:

    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…

    • 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.

  6. serious question kinda says:

    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?

  7. Anonymous says:

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

  8. Ray Finkle says:

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

  9. Not Matt's Mom says:

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

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