Fears For Jobs As Top Firm Said To Lay Off 1,400
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Firms have, of course, been busy cutting heads because of their fixed income (mainly subprime lending-related problems). And staff have been let go following the usual year-end performance appraisal process. But the latest round of cuts said to be taking place at Lehman (the firm has already accounted for some 3,900 heads over the last 12 months) are related to the state of the global economy, and the prospects (of lack of them) for a pick-up in business any time soon. Lehman, of course, is one of four major firms (the others being Bear Stearns, Goldman and Morgan Stanley) whose fiscal first-quarter closed at the end of February. The firm will therefore know exactly how the first trading period of 2008 shaped up. And it probably wasn't that good.
Other firms are now likely to follow Lehman's lead. Financial markets professionals will certainly be worrying about their job security now - it really is 'squeaky bum time'. The smart money says that around 42,000 jobs are likely to go on Wall Street this year, with 10,000 London-based heads also for the chop (around 2,500 jobs are thought already to have gone). Only Asia-Pac is likely to be left relatively unscathed by the aggressive job culls we may now start seeing in the next few weeks. The smart money says that the current round of layoffs is likely to be worse than the 2001 - 2002 retrenchment, which occurred when the dot.com bubble burst, and the global economy entered recession.
The Lehman cuts are said likely to be made across the board - all businesses, all regions, with the US to take the biggest impact, followed by London. Interestingly, The Wall Street Journal quotes an unnamed person 'close to Lehman' who said that they thought that the total layoff number there could be double the 1,400 figure rumoured.
CNBC quotes Michael Poulos, head of financial services in North America at Oliver Wyman, who said that 'there's a structural imbalance in the financial services industry. Most businesses are built for more volume and higher margins than exist today, and which are likely to exist for the next 12 months or so'.
