Gasparino say Merrill layoffs could hit 30,000 from merger

Already posted.

The number just got revised. I thought it was worthy of a repost. That's one hell of an upward revision.

Right you are. My bad.

Companies:Bank of America Corp
By Charlie Gasparino, On-Air Editor | 02 Dec 2008 | 04:27 PM ET

Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill Lynch, three times as many as previously estimated, sources told CNBC.

As of yesterday, sources were saying that layoffs could total at least 10,000 and would start before the end of the year.

But Bank of America CEO Kenneth Lewis wants to wring out $7 billion in savings from the merger over the next few years, so the total number of jobs lost could be closer to 30,000, they said.

Some of these job cuts could be through attrition or the sale of some businesses. But the heaviest cuts will probably come in the investment banking business, which has dried up during the current credit crisis.

http://www.cnbc.com/id/28020076

Much worse. Lewis has a reputation for cutting twice what he says he will.

staggering amounts! take for granted most of laid off people are based in NYC.

anybody knows the amount of wall streeters before the crisis started and now? did it go down by 15% or so?

lets say that some of these ex employees bought with little money down after 2005, if they have to sell they will have to bring money to the table for transaction costs and the like, right?

Job cuts are never good news, but not all of this will be in the I-Bank and this will be spread over several years. Normal attrition per year is 8%, so 8% of 260,000 employees is about 21,000 people. As people leave over the next year or two they just won't replace them. It is not as if they are going to go out tomorrow and layoff 30,000 people.

This is not good news, but I think it is important to understand what it really means and how it actually happens when a firm talks about layoffs.

waverly:
without intent to be dramatic. These layoffs will be large and many will occur quickly. 5-10k will occur within 2 weeks of the merger closing. The entire goal is to reduce payroll asap. Anecdotally, there were significant layoffs TODAY at Credit Suisse and RBC that did not even make the papers or TV. It is very messy.

thanks waverly, didn't know that normal attrition is 8%. it would be interesting to see how much lower the attrition level falls to under this not-so-normal times. changing jobs should be a big component of the 8% that's not going to be there for the next couple of years.

how big the retirement part of the 8% is i don't know, and it could go either way: baby boomers with net worth much smaller than expected before retirement will postpone retirement. but other people that are just not willing to put up with the stress could cash in on home equity, take a severance package and move to a cheaper/more relaxing place.

I'm also not trying t be dramatic, but if you talk to anyone in M&A, they have NOTHING going on. There are no deals to be done, and most firms can get by with at least half the staff they have now.

BTW, the article (click on link above) even says that most of the cuts will come from ibanking. They have 50,000 people in that division (both firms).

8% at normal times. These are not normal times. This is a big problem at some NYC law firms. Normal attrition rates do not apply. People are not leaving their jobs because of concern about the economy, so firms are having focused "evaluations". I doubt Wall Street is having 8% of its work force voluntarily leaving.

do you guys know what was the total labor force in wall street at the beginning of the crisis and how it's shrinking?

thing is, we keep on getting news of layoffs/hiring freezes here and there, but to get a real sense of the damage we should see the big picture, as % of total wall street. is there any blog of the web following these layoffs?

tons of blogs are just pointing at the articles.

the city is now saying 225k jobs lost in all of this. I think the bigger thing is that finance was 5-7% of jobs but 30% of income. And we know bonuses get hit this year, but I think the more important variable is what happens to them 2, 3, 10 years from now...

I read in Crain's this morning so far 14,000 jobs cut this year and another 70,000 being cut in the next 18,000. Remember investment banking, bonds, equities, and mergers and acquisitions—have shut down at once and their business models have been obliterated. The massive fees they got are all gone. The New York State Pension fund has lost about 30 billion dollars so far according to a New Post report today. I wouldn't be surprised if many of these firms end up in litagation, the chicanery and deception was deep and widespread.

Correction 70,000 jobs will vanish in the next 18 months plus another 225,000 private sector jobs. Scary shit! I guess Peter Schiff was right, this was a phony economy!

thanks McHale! great info.

>>> I think the more important variable is what happens to them 2, 3, 10 years from now...

Exactly. This is why this may take a few years to find bottom. Not everybody still believes this is a permanent correction in Wall Street salaries - some people think this is just a down time and things will roar back in 2010 or 2011. I personally don't think we will return to 2007 compensation anytime in the next 10 years, at least not in real terms. Many Wall Street businesses will never be as profitable as they once were.

>>> Remember investment banking, bonds, equities, and mergers and acquisitions—have shut down at once and their business models have been obliterated

Let's not overstate the case. M&A is down but not dead. Ditto with equities. Bond businesss will not return to 2007 levels, but will return eventually. These business models have not been obliterated. What has been obliterated are the businesses that drove Wall Street comp through the roof from 2004-2007: structured products, credit derivatives, prop trading, etc. Sure, M&A was high too due to the private equity boom, but don't think this won't return at some point with valuations so low. Will it return to 2007 levels? Probably not? But will it rebound? Yes.

I would look to Wall Street's size and compensation the mid 1990s (before the worst excesses of the tech boom) as the size / compensation scheme it needs to go back to. This is when it relied on a lot more of the vanilla businesses. There will still be people making a few hundred thousand a year, but fewer of them, and A LOT fewer of them making millions per year.

This obviously means more pain during 2009 and trouble for Manhattan real estate, but I would not say Wall Street is dead.

The era of the big Wall Street payday is over. These jobs are gone for good. The few that will be picked up by boutique firms will be small and nowhere near the compensation they were used to plus many of these jobs are not in New York anyway.

http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081130/FREE/811309953/1008/information

Great read by Cramer

http://nymag.com/news/businessfinance/bottomline/47823/

http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081130/FREE/811309953/1008/information

Just to clarify on what someone said before, is McHale the same as Petrfitz and Your_Landlord and that guy who just sold his Magnum Opus?

Click on: Boutique Bankers Make Hey from this link
http://www.crainsnewyork.com/apps/pbcs.dll/section?category=information

All Wall Street businesses are hurting right now. It's important to distinguish between which ones are down permanentely and which ones are down temporarily and which ones are still okay but just not as good as a record 2007. I stand by what I said earlier. Comp will be permanentely down, but look to the mid-1990s (when Wall Street still paid well, just not offensively so) as the basis.

Personally, I think Jim Cramer is an idiot, although I don't disagree with all of his points. Remember that article he wrote in New York Magazine "On June 30, 2009 - call your broker" ... that was the day before Lehman collapsed! Classic! I have met him personally and was not impressed. If you are that good at picking stocks or calling the market, you do it for a living.

The big Wall STreet payday is over, no doubt about it. Cramer is an enigma and an idiot at times but his insight into this crisis left me breathless...he wrote this article a full year before this meltdown

Bloodier and Bloodier

http://nymag.com/news/businessfinance/bottomline/35813/

http://nymag.com/news/businessfinance/bottomline/49938/

I don't think anybody who understood what was happening could have written this ....

Just to clarify on what someone said before, is McHale the same as Petrfitz and Your_Landlord and that guy who just sold his Magnum Opus?

Nope not familiar with these guys just drift in and out of here occasionally!

Kspeak their business models have been obliterated, The Collapse of Wall Street's Investment Banking Model!It is safe to assume that Wall Street's elite institutions are abandoning the core components of the very business model which created the basis for phenomenal, sustained profits (and bonuses) over the previous three decades. And for good reason, one might add.They are now bank holding companies.

http://nymag.com/news/businessfinance/bottomline/49938/
I don't think anybody who understood what was happening could have written this ....

Like I said the man is an Enigma..............

An enigma or schizophrenic, you pick!

As for the bank holding companies, JPMorgan, Citi, etc. have always been commercial banks. I am not denying that there are some real challenge or that comp will be permantely down. I'm just saying that the older businesses Wall Street used to rely on are not gone forever; it's the newer businesses that really drove the explosion in profits in 2004-2007 that I mentioned (prop trading, prime brokerage, structured products, etc) that I think are in the most trouble. The older businesses (M&A, equity and debt raising) too enjoyed a boom during 2004-2007 so they need to be downsized to the appropriate size, but they aren't gone forever. However, these businesses are not as profitable as some of the newer businesses.

Goldman Sacks is entering I banking and begging for internet deposits and Morgan Stanley is entering the parking meter business....how the mighty have fallen :)

u sound like Joe Kernan

the 50% slash in bonuses at MER just add to the fire.

"It is not as if they are going to go out tomorrow and layoff 30,000 people"

did someone really say that?