How likely are layoffs/team downsizing in research? Are any coverage sectors more or less exposed? Did ER layoff during the 08 recession?
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If you’re in a tough sector getting not much client interest - then unfortunately is tough
What sectors extactly?
From what I heard, there were quite a bit of layoff during 08-09 recession. Some layoffs already happened in recent months at both large and smaller banks. Rumor is that more layoffs could come by year end/ next year if the market continues the same depressed trajectory with the lack of IPOs/follow-ons.
ER funding is heavily tied to IB activities and less so on trading activities at BB. So you can guess whether layoff will happen or not by looking at IB revenue and management comments at quarterly earnings.
other way around
Let me put it in another way. Trading a is a low margin business, and while it's a funding source to ER department, it's not nearly enough to cover the salary/bonus of the ER analysts after paying S&T. One reason hot sectors analysts get the most money is due to the disproportionate volume of IB related activities (initiating on new names). The more names an analyst launch, the more money he/she gets.
It is slowly happening. I am just an intern but one senior analyst (tech) and two assistants (property) disappeared without notice. I don't think they resigned voluntarily. And my firm is hiring a lot of interns and entry-level to replace the seniors.
BB or MM?
Highly ranked seniors in ER, just like IB, don't get replaced because they are hard to come by. They pretty much decide if they want to go or stay, even in non growth sectors and during market turmoil. In worst case scenario, they get minimal bonus. Only not so important lead analysts and juniors get shafted.Lastly, even though the market is bad for banks, the reality is that large MM HFs are doing real well and they need to be served and they pay the most to banks. The top ER shops will get most dollars and leave crumbs and consolidation/reduction at smaller/less reputable places.
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