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

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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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Layoffs Watch '12: Deutsche Bank, Barclays, Nomura, Credit Suisse, UBS

Things could be better in Europe. Big investment banks in Europe, including Nomura, Credit Suisse and UBS, are stepping up plans to cut jobs as they seek to adapt to a drastic slowdown in revenues and tighter regulation. Bank executives, headhunters and analysts say that the cuts are shaping up as the deepest since the start of the financial crisis after a disappointing summer dashed hopes of a business revival. One senior headhunter said many large investment banks will have “at least 20 per cent” fewer staff in capital markets and M&A advisory business in Europe by the end of the year compared with late 2011. “It [the market] has never been as bad as this. Bankers have long lost confidence in their banks but now they are also losing their self-confidence, their mojo,” a senior advisory banker said. Among the banks that will reduce their investment banking workforce is Japan’s Nomura, where London-based bankers say that they expect several hundred jobs to be removed in Europe alone as part of a $1bn cost-cutting effort. Switzerland’s largest bank UBS, which cut staff levels earlier than rivals by announcing 2,000 job cuts in the investment bank after a $2.3bn unauthorised trading loss last year, is preparing for intensified cuts as it is seeking to streamline further the unit, several people familiar with the situation said. At Credit Suisse, insiders estimate that the additional SFr1bn ($1bn) in groupwide cuts that were announced in July will translate into up to 1,000 jobs being lost, most of which would be in the investment bank. Analysts expect also Deutsche Bank and Barclays to reduce their headcount further this year. Deutsche said two months ago it would reduce staff levels by 1,900. Investment Banks Eye Europe Job Cuts [FT]