IB Layoffs USA Thread 22-23

BBs are balance sheet banks which have loans outstanding and retail exposure and therefore are in my opinion more susceptible to the harms of a rising rate environment (despite also being exposed to the upside of such an environment within the narrow confines of what kind of spread they can charge).

but more importantly, two things:

1. BBs are astronomically larger organizations with more cost centers. When top line revenue declines those costs will need to be cut commensurately or profitability suffers

2. the biz model of a BB entails being in all markets at all times - it isn’t so important that you be the best in all verticals, just that you are open for business in almost all verticals and therefore ready to cross sell through them / maintain whatever market share you’re accustomed to. Because they are so big they will almost necessarily feel the drag of a wide economic malaise. EBs by contrast focus on their strong-suit. So while some that are tech oriented are probably feeling the pain, they will likely do better because they only maintain serious outposts in spaces where they can be number 1, 2 or 3 - in a recessionary environment they will still see deal flow, and due to the smaller headcount, probably be able to (and need to) hold on to their people yo service said deal flow.