US Investment Banks Face Deeper Job Cuts Amid Economic Uncertainty
US investment banks are preparing for significant job cuts as economic uncertainty continues to impact deal-making activities. Major players like Goldman Sachs, Morgan Stanley, JP Morgan, and Bank of America have already begun to trim their workforce, with further layoffs anticipated if deal activity does not rebound.
Last year, investment banking fees experienced a decline of 6.3%, reflecting the overall slowdown in the sector. Equity offerings have particularly suffered, with IPO issuance plummeting to $50.7 billion, down from $69 billion the previous year. As larger banks lead the way in layoffs, boutique firms are expected to follow suit if the lack of deal flow persists.
Market uncertainty, driven by US tariffs and fears of an economic slowdown, has dampened corporate confidence. Bankers report that companies are hesitant to go public due to concerns about stock performance following IPOs. This downturn poses a threat to Wall Street's bonus pools for 2025, with bank stocks feeling the pressure—smaller firms are facing the most significant impacts.
US brokerage firm Openheimer has revised its investment banking revenue growth forecast to a stark 0% from a prior estimate of 32%. To navigate this challenging environment, banks may need to cut costs through headcount reductions and lower compensation packages.
Recruiters indicate that staffing decisions will largely depend on deal pipelines in the upcoming months. While some sectors, such as private credit and technology, continue to show resilience, consumer, industrial, and construction-related businesses are anticipated to struggle. Goldman Sachs maintains that its recent job cuts are part of a routine annual review process.
As Wall Street braces for the potential impacts of hiring freezes and reduced bonuses, all eyes will be on deal activity in the latter half of the year, as it will ultimately determine the future staffing and growth strategies of these financial institutions.
For more insights on the evolving landscape of investment banking, stay tuned to our updates.
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