U.S. Banks Quietly Cut Jobs as Economic Uncertainty Looms



Key Takeaways

  • Despite a resilient economy, the five largest U.S. banks have collectively shed 20,000 jobs this year due to various economic pressures.
  • Job losses within the financial industry may intensify in the coming year as banks grapple with rising defaults on loans.

Economic Factors Drive Job Cuts

Despite the economic outlook outperforming expectations, major U.S. banks have embarked on a quiet yet substantial wave of layoffs, and further workforce reductions are anticipated. These cutbacks are notably observed among the nation’s five largest banks, excluding JPMorgan Chase, which stands as the most substantial and profitable among them.


The backdrop for these layoffs involves the impact of higher interest rates on mortgage operations, dynamics in Wall Street deal-making, and escalated funding costs. The last two years saw a surge in hiring due to heightened activity in Wall Street during the Covid pandemic. However, the tide shifted as the Federal Reserve commenced raising interest rates to counter an overheating economy. Banks found themselves overstaffed for an environment in which fewer consumers sought mortgages and corporations issued debt or engaged in acquisitions.

Proactive Cost-Cutting Amid Economic Uncertainty

Economic uncertainty on the horizon is driving banks to trim costs where possible. The U.S. labor market, in particular, could face increasing pressure in 2024, given the looming challenges in the financial industry. Lenders are bracing themselves for deeper cuts in response to mounting defaults on corporate and consumer loans.


Analyst Chris Marinac noted, “They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad.” As we enter January, it’s expected that many companies will emphasize the need for cost-saving measures.

Deepest Cuts at Wells Fargo and Goldman Sachs

Wells Fargo and Goldman Sachs have witnessed the most significant workforce reductions among the large banks. Both institutions grapple with declines in key revenue-generating areas. Each of these banks has shed roughly 5% of their workforce over the course of the year.


For Wells Fargo, the job cuts followed the bank’s strategic shift away from the mortgage business earlier in the year. Despite reducing headcount by 50,000 employees in the past three years as part of a cost-cutting initiative led by CEO Charlie Scharf, the bank continues its downsizing efforts. CFO Mike Santomassimo noted that “very few parts of the company” would be spared from cuts, with additional layoffs expected.

Goldman’s Approach to Reductions

Goldman Sachs, after implementing several rounds of layoffs in the past year, believes that they have “right-sized” the bank and do not foresee a mass layoff similar to the one carried out in January. However, the bank’s headcount will continue to decrease. Goldman’s shift away from consumer finance, including the sale of two businesses— a wealth management unit and fintech lender GreenSky—will contribute to the declining headcount.


The decrease in job-hopping within the financial sector, unlike previous years, has left banks with a surplus of staff. Morgan Stanley, for instance, has already reduced 2% of its workforce this year amid a prolonged slowdown in investment banking activity.

Differing Approaches in the Big Six Banks

While headcount at Bank of America decreased by 1.9% this year, the firm has also hired 12,000 new employees, indicating a notable rate of attrition. In Citigroup’s case, although staff numbers remained stable at 240,000 this year, CFO Mark Mason disclosed plans for 7,000 job cuts linked to “repositioning charges.” Furthermore, CEO Jane Fraser’s restructuring plans and divestitures will continue to reduce headcount.


JPMorgan, in contrast, stands out as an anomaly within the industry. The bank expanded its workforce by 5.1% this year, attributed to branch network expansion, aggressive technology investments, and the acquisition of First Republic, which added about 5,000 positions. While the bank is currently on a hiring spree, it still has more than 10,000 open positions.


In conclusion, as U.S. banks navigate the evolving economic landscape, they must find ways to manage costs and ensure their survival, potentially leading to further job cuts in the sector. JPMorgan’s exceptional performance underscores the sector’s overall challenges in responding to the changing economic climate.