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Wall Street Workers Now Face Layoffs
Wall Street employees, many of them still shaken by the terrorist attacks, now face another threat: losing their jobs.
Credit Suisse First Boston said Tuesday that it will fire 2,000 employees, or 7% of its global workforce, on the heels of layoffs last week at Morgan Stanley.
While the brokerage firms are loath to hand out pink slips, they have few options. Business is dismal. In a stagnant economy and with the country at war, few companies want to hire investment bankers to help them sell stock or take over a competitor.
Historically, brokerage firms cut their head count by about 12% during slow times, according to Bob Napoli, an analyst at ABN Amro. Through the end of August, the firms had reduced payrolls by only 3%.
The Securities Industry Association released a report Tuesday predicting the brokerage firms collectively lost $200 million in the third quarter.
Napoli estimates that industry profits this year will fall an average of 32%. Charles Schwab, which has eliminated one out of every four jobs, is expected to fare the worst, with a 60% decline in profits. Citigroup, which owns Salomon Smith Barney, should show the best performance: a 6% gain for the year.
Many firms also are shelling out millions of dollars for temporary offices and new computers for employees who used to work in the World Trade Center and surrounding buildings.
Both Lehman Bros. and Merrill Lynch fled their headquarters across the street from the World Trade Center. Morgan Stanley relocated about 3,500 retail brokers and staff. Many employees are working out of their homes, hotel rooms or makeshift offices, while others are facing long, detour-ridden commutes.
Lehman, which signed a deal Monday to buy a building in midtown Manhattan for about $650 million to be its new headquarters, said it wouldn't lay off people this year. Bonuses, however, are expected to be smaller.
Merrill hasn't announced layoffs, but the company has already cut its workforce by 3,800 this year.
Last week, Morgan Stanley started handing out pink slips to between 150 and 200 investment bankers. Wall Street analysts say the firm postponed its decision several weeks because of the Trade Center attack. None of those fired worked in the twin towers.
Likewise, Credit Suisse First Boston had more than 800 employees who survived the World Trade Center collapse. All of them still have jobs.
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