To Boost Morale, Citi And Morgan Stanley Halt Layoffs With Banker Bonuses Set To Tumble
Here’s a post everyone can timestamp and revisit in a few months time, and certainly around year end.
In an effort to boost flagging employee morale amid the sheer market chaos, not to mention countless traders working from home unsure when and if they will go back to the office, Reuters reports that Morgan Stanley and Citigroup have halted planned layoffs as the coronavirus pandemic has led to a record level of unemployment claims and unprecedented economic uncertainty, according to sources.
Morgan Stanley on Thursday pledged to not cut any jobs this year, according to a memo seen by Reuters, as the Wall Street bank sought to reassure worried employees during the coronavirus pandemic.
“While long term we can’t be sure how this will play out, we want to commit to you that there will not be a reduction in force at Morgan Stanley in 2020,” Morgan Stanley CEO James Gorman said in the note.
“Aside from a performance issue or a breach of the Code of Conduct, your jobs are secure,” Gorman told Morgan Stanley’s 57,000 employees. “At the end of this year, we will know what we are dealing with, and hopefully the economy will be on the mend by then.” About 90% of Morgan Stanley’s employees are working from home.
Citigroup Chief Executive Michael Corbat also ordered a suspension of any planned layoffs, a source told Reuters.
Or perhaps by “suspension” banks mean just the next 2-3 weeks, because as Bloomberg adds, the move is only “temporary”, citing a person familiar with the matter.
Earlier this week, Citigroup announced it would begin handing out $1,000 bonuses to certain employees and has told workers that sick days taken during the pandemic won’t count toward paid time off.
Banks are seeking to reassure their workers about their job security as the global pandemic has sparked concerns about lenders’ profitability amid persistently low interest rates and the potential for rising loan losses.
Yet even if they keep their jobs, bankers will hardly be too excited: according to a report released by a top New York state financial regulator, the average Wall Street bonus is poised to sink this year after growing 3% in 2019 to $164,000, as the coronavirus pandemic causes steep losses in the financial industry.
“The securities industry had a good year in 2019, but the serious damage that COVID-19 is inflicting on financial markets and the global economy will sharply reduce industry profits this year,” New York State Comptroller Thomas DiNapoli said in a statement on Tuesday, referring to the disease caused by the coronavirus.
Although only about 182,100 people work on Wall Street, its highly-paid traders and sales people earn about one-fifth of all private-sector wages in New York City, according to the report.
The securities industry overall paid $13.2 billion, or roughly 17%, of state tax collections during the 2019 state fiscal year, and $3.7 billion, or 6%, of city tax collections over the same period, according to the report.
DiNapoli warned that the city and state will likely need to fill gaps in their tax base as the cost of the coronavirus to the securities industry will result in lower taxes paid for 2020.
“The securities industry is integral to New York state’s and New York City’s economies, as a source of tax revenue and job creator in other industries,” DiNapoli said. “The state and the city need to prepare for the severe budgetary implications of the coronavirus crisis.”
Or not: after all, why else did the bailout fund leave a handy $454 billion in Fed funds to spend as the central bank sees fit:
“Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….”
And what better way to provide liquidity to the financial system than making sure $20 million Tribeca triplexes owned by Goldman MDs aren’t subject to firesale liquidations…
Thu, 03/26/2020 – 14:40