Fired Bankers’ Job Prospects Fade With Firms Under Pressure to Cut Costs

Through much of 2020’s bleak economy, the financial industry has provided an oasis of stability to a vast tract of the American workforce. That’s starting to fade.

In the months since Wells Fargo & Co. broke with U.S. rivals that once vowed to resist wide-scale firings in the pandemic, a growing number of them have started cutting too. Hiring activity has tumbled from a year ago. And with both trends showing no signs of abating, many bankers losing jobs will find it harder to get back in.

“Financial services and banking has too many people,” said Alan Johnson, the head of compensation-consulting firm Johnson Associates Inc., who predicts the industry’s headcount will shrink 10% by mid-2021 from its level as the pandemic began. “Next year is going to be very low hiring. There’ll be some layoffs.”

That outlook for legions of financial workers contrasts with the temporary assurances their firms once offered as the coronavirus erupted across the country, unleashing widespread job losses in sectors such as travel, dining, retail and energy. At the time, lenders were earning fees arranging emergency loans for businesses, while their Wall Street desks handled a surge in trading and sales of stocks and bonds.

But there was never much doubt banks would resume their war on costs, especially as they face billions in bad loans after months of heightened unemployment. Many lenders have already set reductions in motion. Last week’s election damped hopes that Congress might pass a stimulus package to bail out borrowers. And even Monday’s news of a promising vaccination, which helped banks pare 2020’s stock losses, is unlikely to prompt firms to reverse course anytime soon.

Dreading Dismissal

While firings will touch a wide range of units, they will focus most on traditional banking services that customers have learned to access online instead of at branches, and on back-office roles that can be automated. Mergers of subsidiaries facing acute cost pressures — such as asset managers and discount brokerages — are also eliminating jobs. There may be fewer firings on Wall Street, so long as market activity and revenue hold up.

In recent weeks, Wells Fargo cut more than 700 commercial-banking jobs and dozens of fixed-income research analysts. JPMorgan Chase & Co. started hundreds of dismissals, including about 80 at its consumer unit. Goldman Sachs Group Inc. began eliminating roughly 400 positions, including back-office roles that had been folded into bigger money-making divisions.

But Wells Fargo, the largest employer among U.S. banks, is expected to go much further in the coming years, eventually shedding up to tens of thousands of workers. The bank has said it will continue to reduce branches as part of cost-cutting efforts.

One Wells Fargo teller said she wakes up every morning wondering if it will be her last day at the bank. A manager told her she was going to be let go, but when her branch closed she was temporarily assigned to another where she’s in limbo. She described the situation as both frustrating and depressing: She keeps checking the bank’s internal job postings to find another role, but there aren’t any nearby. Colleagues already hunting for work elsewhere have told her there’s nothing out there.

Wells Fargo’s broad push to cut costs includes shutting some branches, particularly where it has multiple locations close together, said Vickee Adams, a spokeswoman for the bank.

“In those situations, to ensure we continue to serve customers well, we keep employees working in other nearby branches whenever possible,” Adams said. “We are as responsive to our employees as possible, providing jobs-search resources and other assistance as best we can.”

Fewer Openings

Workers pushed out of major banks may find it hard to land a job at a smaller rival, said Tom Szmanda, president of Symicor Group, a staffing firm for community banks. Employees at larger banks tend to specialize in certain areas, while smaller competitors are looking for more diversified experience in community banking, he said. Openings are also limited, as most lenders are not looking to grow headcount.

It’s particularly tough for people in more senior positions, where the length of time to land a job has roughly doubled from what it was before the pandemic, he said. And those who do find work, usually take a pay cut.

“We’ve really encouraged all of our big bank candidates to think really carefully about their compensation demands today,” Szmanda said.

Openings in banking and finance have slowed dramatically, according to employment site Indeed.com. Its data on job-posting trends shows activity down 21% in late October from a year earlier, compared with a 14% decline in the overall labor market.

Bright Spots

One exception is in mortgage operations, where banks are adding to staff amid surging demand for new homes and mortgage refinancing. To bring on enough people, banks have been more willing to hire remote workers and train entry-level staff, said Jeramy Kaiman, head of professional recruitment in western U.S. at staffing firm Adecco Group.

“Mortgage is booming — I don’t even know what other word to say,” Kaiman said. “Candidates are all receiving three to five offers in 24 hours when they’re on the market.”

One silver lining for job hunters now is that the industry’s unemployment rate of 3.1% last month is much lower than in sectors hit harder by the pandemic, such as the 15.9% rate for hospitality and food services, according to the Bureau of Labor Statistics. So for now, competition for openings isn’t too harsh.

At Frost Bank, a Texas lender expanding its branch network in Houston, the number of applicants has held relatively steady, aside from a 10% to 15% increase in those seeking commercial lending roles, said regional president David LePori. At Ally Financial Inc. the typical number of responses for every open position ticked up to around 27 to 30 in the second quarter from 24 earlier in the year, but it has yet to go higher, said Nicole Fitz, executive director of talent management.

Expect that to worsen in the coming months, said Johnson, the consultant.

“Firms are not hiring at the levels they were,” he said. The trajectory of economic recovery “is so unknown and it’s so uncertain and it’s so significant, and you overlay the pandemic and remote working and Zoom — if you’re a laid-off employee, this is a very difficult set of circumstances.”

— With assistance by Hannah Levitt

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