Big banks are quietly cutting thousands of employees, and more layoffs are coming

Throughout this year, the largest American banks have been discreetly downsizing their workforces, with indications that more significant layoffs are on the horizon. This downsizing trend, contrary to expectations of economic resilience, has been primarily driven by factors such as higher interest rates impacting the mortgage industry, shifts in Wall Street deal-making, and evolving funding costs.

Notably, JPMorgan Chase stands as the exception, remaining the largest and most profitable bank in the United States without a significant reduction in its workforce.

In response to these challenges, the next five largest U.S. banks have collectively eliminated approximately 20,000 positions, as reported in company filings. This downsizing follows a two-year period of substantial hiring growth during the COVID-19 pandemic, a time marked by a surge in Wall Street activity.

The hiring boom waned after the Federal Reserve initiated interest rate increases to stabilize the economy. This shift in monetary policy left banks with an excess of staff for an environment where demand for mortgages had decreased, and fewer corporations were engaging in debt issuance or acquisitions.

This recent downsizing within the banking sector underscores the dynamic nature of the financial industry, which can be significantly influenced by economic conditions, monetary policies, and market trends. The sector continues to adapt to evolving circumstances to ensure its stability and competitiveness.