Wall Street banks are reportedly gearing up to cut staff amid ongoing economic uncertainty.
Recruiters and analysts discussed the state of dealmaking in a Wednesday (March 26) Reuters report. Tariff threats by President Donald Trump have upset the stock market and heightened the risk of an economic slowdown.
This has shaken the confidence Wall Street had at the start of the year that a more business-friendly White House would usher in more mergers and acquisitions (M&A) and initial public offerings (IPOs), the report said.
While some banks — J.P. Morgan and Bank of America among them — are already making their annual cuts of underperforming workers, others could soon follow suit, according to the report.
“There’s an expectation that investment banking pickup is delayed, not dead,” said Mike Mayo, a banking analyst at Wells Fargo, per the report. “But if we’re having this discussion in the middle of the summer, that could be a different story. If the revenues aren’t coming in, then employees bear the brunt.”
Bigger banks are quicker to eliminate staff, while boutique banks could follow, said Chris Connors, principal of Johnson Associates, a compensation consultant, according to the report.
“If the pipeline does not materialize quickly, then they’ll make moves to reduce staffing levels,” he said, per the report.
The volume of M&A so far this year has risen more slowly than advisors had expected at the end of 2024. Dealmaking since the start of the year has fallen to its lowest number in more than a decade. Around 6,600 transactions have been announced worldwide for the first quarter, an almost 30% decline since last year and 44% below the peak marked in 2021.
“There is always uncertainty when a new administration comes to power, but the uncertainty today is well beyond whatever I’ve experienced before,” Jonathan Corsico, head of the M&A practice for law firm Simpson Thacher, told the Financial Times.
This economic uncertainty is impacting chief financial officers, PYMNTS reported March 14.
“CFOs, traditionally tasked with financial stewardship and reporting, now find themselves at the strategic nexus, required to foresee multiple moves ahead, much like a chess grandmaster contending with the variable moves of an opponent,” the report said.
