JP Morgan lays off hundreds of mortgage employees shortly after making a hiring announcement in 2023
The news of layoffs in JP Morgan has come off after its competitor Morgan Stanley started handing pink slips to the employees amidst the global slowdown.
JP Morgan has joined the bandwagon in the list of financial institutions that would undergo a massive restructuring process. According to good sources, JP Morgan Chase and Company has laid off hundreds of mortgage employees. The layoffs took place after a few hours when the company announced new vacancies and hiring for other positions.
Based on legitimate sources, JP Morgan has shared its plans to hire about 500 bankers. However, the firm’s spokesperson has said that the company regularly reviews its business and customer needs and transforms its workforce accordingly. As a result, the company will create new roles where they require or cut headcounts in situations where it is appropriate.
Furthermore, the report had asserted that before the announcements of JP Morgan layoffs were brought into account, the bankers were hired to meet the needs of small businesses by 2024. It was considered integral as JP Morgan planned to enhance the bank’s workforce by targeting an increase of 20 percent of the total headcount to comprise 2300 bankers.
The layoffs have even brought to light that the company’s CEO has previously stated that hiring would continue for the banking sector in the firm. The company is still opening branches and still hiring bankers around the world. They would increase the workforce of middle-market bankers overseas because JP Morgan caters to the needs of a broad base of clients.
The news of the layoffs has come into highlight after its rival Morgan Stanley announced a massive restructuring process in the global macroeconomic condition. However, the financial firm has not yet commented on its decision to hand out pink slips to its employees.
Previously, the CEO of JP Morgan and Chase stated in an interview that the country is being hit with high inflation, monetary tightening policies by the central banks, and the declining stock markets by 20 percent. He has already given a heads-up to the people to prepare for the tough times ahead.
Dimon has further mentioned that most of the competitors have continued with the restructuring process, like Wells Fargo, and Morgan Stanley, but the former has continued to hire.
The company is still in a hiring frenzy and has many growths plans to execute. He has asserted that recession can not become a barrier to expanding the business for the financial firm. The company is gearing up to open its branches in other locations. In addition, he has added that these plans could also benefit the shareholders.
Prominent finance firms, including JP Morgan, could not overcome the waves of layoffs:
Initially, the world assumed that prominent finance firms would not undergo a layoff or reduction in force, but the following results are contrary. The results from prominent firms like Bank of America, JP Morgan, and CITi show that layoffs are on the verge, and they are going to be huge.
In the last year, the war between Russia and Ukraine caused a downfall in investment banking revenues. Layoffs first began to mention. During that time, the firm’s accurate decision was to wait while they spent most of the revenue on the generation of banking divisions and compensate for the workforce shortage in 2021.
The banks did not want to take any decision hastily. But, the continued decline in revenues n the banking sector has continued for Q4. The decline persisted in investment banking divisions and capital markets.
There were no chances of a comeback in 2023. Banks were provided with little to no choice but to downsize their workforce to fit into the new revenue environment
Previously, the banking sector had recorded an investment revenue of 1.4 billion USD in the fourth quarter, which accounted for less than 57 percent Y-o-Y.
JP Morgan has revealed plans to cut off the bonuses of the investment bankers by 30 percent. Raghavan, JP Morgan, and Chase’s co-head have stated that all banks pay for performance, so if there is no performance, there would not be any compensation.
He has moreover added that the markets suffered in 2022 with volatility-based equity markets and strong macro and rates. This has resulted in the decline of cash equities.
The layoffs have implications in almost all sectors, and it is not surprising that it has taken over the banking sector. Bank of America has frozen down the hiring process, and Morgan Stanley announcing layoffs implies that the worse is yet to come.
Edited by Prakriti Arora