What Bank of America and Citi said about hiring last week
It's Davos. That means that before the week is out we're likely to get some pithy side comments from bank CEOs on what they plan to do about headcount this year. After all, only a few banks have announced job cuts so far, but every bank faces the same dynamic of falling revenues from banking deals and a potential decline in fixed income trading revenues after last year's boom.
Until this happens, we have comments banks make during investor calls to illuminate their hiring intentions in 2023. The comments made by both Citi and BofA weren't all that bullish. But they weren't entirely gloomy, either.
Citi has had a long and recently faltering run of hiring senior investment bankers. At last year's March investment day, it said it had recruited 70 managing directors in 2021, of whom 40 were in North America. In July 2022, CEO Jane Fraser said the bank would continue hiring dealmakers even as dealmaking slowed. In December, however, Fraser said dealmaker hiring was being "repaced" as revenues fell.
Last Friday's call confirmed that recruitment at Citi will be far less gung-ho this year than last. Following Q4 year-on-year revenue falls of 53%, 68% and 56% respectively across M&A, equity capital market and debt capital markets, CFO Mark Mason said the bank will "continue to invest in front office talent, albeit at a more measured pace, given the environment."
Citi will, however, keep on spending, both on technology and on upgrading its data, risk and control infrastructure as part of its transformation program (of which 25% of spending is technology spending anyway). Last year, the bank spent an additional 13% on technology; this year it will increase spending by a further 5%. It's likely that technology jobs will be created and non-technology jobs will be lost as a result: the transformation program is all about a technically-driven transition away from "manually intensive processes."
Technology spending is also increasing at Bank of America, where it's rising from $3.4bn last year to $3.7bn this year. However, hiring in other areas is likely to wane. BofA CEO Brian Moynihan already bemoaned the bank's rising headcount by virtue of fewer staff exits in December and last week he elaborated further. BofA hiked hiring in early 2022 and its hiring managers were "sort of overachieving," says Moynihan. As a result, when the pace of staff exits slowed later in the year, BofA found itself with too many people.
It doesn't sound like a recipe for hiring in 2023, but Moynihan celebrated the positive impact of some of last year's staff additions. He said the macro sales and trading business in particular was a place where BoFA spent 2022 investing "continuously" and that revenues rose there as a result.
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