Banking Giants Wells Fargo, Bank of America, and Citigroup Witness Workforce Reductions in 2023 Amid Economic Challenges

In their fourth-quarter earnings reports on Friday, Wells Fargo, Bank of America, and Citigroup collectively revealed a workforce reduction of 17,700 employees last year. The banking giants attributed the downsizing to diminished dealmaking opportunities and softened demand from borrowers, prompting layoffs and a halt in replacements for departing staff.

While these financial institutions grappled with challenging economic conditions, JPMorgan Chase, the nation’s largest lender, defied the trend by expanding its workforce for the third consecutive year. The move came in stark contrast to the broader industry, where layoffs were prevalent due to a tough economic landscape.

The banking sector faced headwinds throughout the year as commercial real estate weakness and proposed capital rules presented hurdles to lending activities. Economic uncertainty took its toll on dealmaking, leading to a tough year for Wall Street businesses.

Despite the struggles, JPMorgan Chase added over 16,200 employees, signaling a commitment to growth in the face of adversity. The bank’s strategic acquisition of failed lender First Republic Bank in May contributed to the increase in its workforce. JPMorgan has consistently added jobs each year since 2021.

Citigroup reported a reduction of 1,000 employees, bringing its headcount to 239,000 in 2023. The bank also outlined plans for further job cuts, with a goal of eliminating 20,000 positions over the next two years. Bank of America and Wells Fargo experienced workforce contractions of about 2% and 5%, respectively, in the same period.

Goldman Sachs and Morgan Stanley, two other major players in the industry, are set to disclose their latest headcount next week. As of September end, they had already cut over 4,300 jobs compared to the previous year.

Goldman Sachs, in particular, undertook its most significant round of layoffs since the global financial crisis of 2008 earlier in 2023. The bank’s CFO, Denis Coleman, expressed the ability to make “selective investments” in headcount by October, suggesting a cautious approach to workforce adjustments.

As the banking industry navigates economic challenges and adapts to changing market dynamics, the workforce reductions reflect an ongoing effort by major financial institutions to optimize operations and maintain resilience in a dynamic financial landscape.