Will Wall Street Banks Cut More Jobs Amid Market Uncertainty?
U.S. investment banks might lay off more employees if economic uncertainty continues to slow down deals, experts say.
But Why
Concerns about the economy have grown after U.S. President Donald Trump’s threats to impose tariffs on trading partners. These threats have caused market instability, made fundraising harder, and raised fears of a slowdown. Many had expected deal-making to increase under a business-friendly administration, but the current turmoil has changed that outlook.
Job Cuts Already Underway
Big banks like JPMorgan and Bank of America have already started cutting underperforming employees as part of their yearly evaluations. More layoffs are expected in the coming weeks. If deal activity does not recover soon, other major banks and smaller firms may also reduce their staff.
Declining Investment Banking Fees and Stock Offerings
Investment banking fees have dropped 6.3% in early 2025 compared to the same period last year, according to Dealogic data. Fees were even higher in the fourth quarter of 2024 when dealmaking saw a temporary boost. Additionally, the number of stock offerings has fallen, with companies raising only $57 billion as of mid-March, down from $69 billion in the same period last year. Many executives worry that their companies’ stocks may not perform well after going public, making them hesitant to move forward with IPOs.
Wall Street Bonuses at Risk
Wall Street bonuses increased last year due to a rise in activity, but they could be at risk for 2025 if dealmaking does not pick up. For example, Bank of America’s bonus pool for investment bankers grew by an average of 10% for 2024. Top bank executives also received pay raises.
Bank Stocks Under Pressure
Bank stocks have suffered as the economic outlook remains uncertain. Smaller investment banks have been hit the hardest, while bigger banks have managed to hold up better because they earn money from different sources, including trading, consumer banking, and wealth management. Many banks are now reviewing their staffing levels, especially after recent resignations and hiring waves that typically follow annual bonus payments.
