2019 layoff risk

Given the markets are in turmoil, what is the risk of cuts for bankers in product or coverage groups in 2019? What levels (MD / D / VP / AO / AN) tend to be hit the hardest?

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Comments (13)

Jan 4, 2019


Jan 4, 2019

I believe VP tends to get hit the hardest, but that is based off rough recollection of past posts.

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Jan 6, 2019

Agreed. My experience is junior VP and senior associate is the sweet spot for cuts because it's sort of no-man's land . . more senior folks have poltical capital and clients, and more junior folks are cheaper.

Avoid overweighting this consideration though. It's just one factor. The strongest factor is still that top performers at any level are safer than others.

Jan 4, 2019

Would "turmoil" be the correct term for the current state of the markets? Most of the global markets, and none of the US markets are currently even in a bear market. Especially given Powell's comments and the jobs report today, I wouldn't say the markets are in turmoil. That doesn't mean jobs aren't at risk though. Just a thought.

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Jan 4, 2019

Hit the hardest? Definitely VP, at this level you're not quite yet bringing in revenue, you're very expensive to the firm and a good mid-senior associate should be able to do your job. I remember speaking to an associate at a BB 10yrs ago when I was still at uni and he was telling me most VPs left or were let go. That said I also know someone who worked at Lehman and survived a restructuring at another bank later as VP, he was very good, MDs loved him and he was flexible with changing teams (I think he moved between 3-4 industry groups over a few years), so you can get protected in bad times if you're good.

Next in line I'd say is 'trimming the fat' for MDs & Ds, so while in good times the bank could give an MD/D another year to recover from a bad year, or support a group with, say, 1 MD and 2 EDs because they had strong deal flow that year, when the market turns I would think there's more scrutinity and less tolerance for underperforming revenue generators.

Generally speaking AN and AS levels are the least affected (relative to other levels, that is), because you're cheap & actually the guys doing the work. Unless they close your industry/product line or you're in a team of 10 analysts, then you should be fine.

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Jan 11, 2019

Are you referring to groups or deal teams with 10 analysts? I could be wrong but don't a lot of groups have more than 10 like GS NR or even a generalist EB like CVP or MOE (not asking about a LAZ that would place its class of 30-40 into different groups). Would those types of firms trim their analyst count?

Jan 6, 2019

Actually why are senior investment bankers expensive (especially VP/D)? I thought their pay is mostly dependent on bonuses and in this case can't banks just reduce the bonuses?

On the other hand senior associates only have a slightly lower base but their cash components are more than VPs. Wouldn't junior analysts and senior assos be more vulnerable?

Jan 8, 2019

Directors, generally, are eat what they kill comp wise. They're supposed to be bringing in engagements / revenue. VP's still get comp'd in same fashion as associates and analysts. That's why they're so 86'able.

Jan 8, 2019

Maybe I don't quite understand the rationale for who gets cut in lean times, but it would seem to me the best thing would be to try and retain good performers through the bust (albeit with reduced incentive comp) with the promise that bonuses will rebound once the market turns. Not like they could easily lateral out if the sector/product is struggling across the Street.

Jan 6, 2019

From what I understand, it's less about a specific level and more about your particular skill that matters.

ANLs will generally be protected even if they suck, because they'll be out the door in <2 years, and even a terrible analyst can flip books and price update comps.

Besides that, ASOs, VPs, DIRs, who are clearly not on a path to promotion would be at risk. This almost automatically exempts ASO0 - ASO2s.

This is dependent on skill, runway (ie are you a 3rd year DIR who is good at execution but not able to bring in $ off your own contacts? Are you in a small group that is already fully staffed at MD?), and popularity amongst seniors/HR.

That said, I don't personally foresee cuts due to trading volatility. The banks are still generating fees because companies are still making money and doing M&A, even if equity and debt deals are harder to print.