Three big reasons why US banks will start hiring again. 11 small reasons why they won't (2024)

Most big US banks have now reported their results for the first quarter, and they weren't at all bad.

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If you're a candidate looking for a new banking job or a recruiter looking for a new client, there's reason to hope that the hiring outlook is improving. However, there is also reason to believe that it won't improve that much yet.

The positives are as follows:

Banking is back

As predicted by JPMorgan's European banking analysts before Q1 results were out, combined revenues across the investment banking division ( and equity and debt capital markets) rebounded year-on-year in the first quarter. At Bank of America, for example, investment banking fees were up 35% in the first three months.

The fine first quarter prompted Morgan Stanley to proclaim that it's now hiring opportunistically as deals get done. "The need to execute on cross-border M&A is here," said Morgan Stanley CEO Ted Pick. "I’m feeling good about this being early to mid-cycle for the classic investment banking capital markets business around the world," Pick added, pointing out that clients need to adjust to the supply chain disruptions caused by "two wars" and that financial sponsors and corporates are likely to get into bidding wars.

At Goldman Sachs, CEO David Solomon was also bullish. Solomon said the new cycle is being driven by AI, which will encourage dealmaking and capital-raising for the next five to ten years.

At Bank of America, Brian Moynihan said growth is being driven by the mid-market, where the bank now has over 200 bankers, compared to just 15 in the pre-pandemic days of 2018.

It's been great for some fixed income revenues

Revenues from trading and financing fixed income, currencies and commodities (FICC) at Goldman Sachs rose 10% year-on-year in the first quarter, driven by mortgages, structured lending, FX and credit trading.

Goldman CFO Denis Coleman said Q1 was a "very benign operating environment" with "good opportunities to risk intermediate on behalf of clients across geographies, across asset classes.

"Credit spreads were tightening, equity valuations were going up, and that provides a tailwind to our performance across portions of our global banking and markets business as well," Coleman added.

Macro trading revenues were less healthy, however. At Citi they were down 20% year-on-year.

Profits are back

Banks are making money again. Profits across Goldman Sachs rose 28% year-on-year in the first quarter. In Morgan Stanley's institutional securities business, they rose 24% over the same period.

The return on equity in Goldman Sachs' banking and markets business was a very healthy 18%. "There's no way to shade this. It was a strong quarter for Global Banking and Markets," declared Solomon.

In the circ*mstances, it might be expected that banks will start hiring again. And yet, before anyone resigns without a job to go to, it's worth outlining the reasons why optimism could also be premature.

Banks are still cutting jobs

Banks may be saying all the right things, but they are also cutting costs.

Citi, for example, has now cut 7,000 jobs, but it wants to cut 20,000 in total. 5,000 of those are to come from technology and support functions. Goldman Sachs cut 900 people between December and March; Morgan Stanley cut 400 people across the bank in Q1; Bank of America cut 650. HSBC and Morgan Stanley are currently cutting in Hong Kong.

This was not, therefore, a growth quarter for headcount. Banks are still engaged in "digital transformation" as technology and AI create opportunities to cut jobs. Morgan Stanley said cryptically that it wants to increase operating leverage in the "higher brackets" of its securities business.


Although Pick said that the "two wars" are driving dealmaking, they are also encouraging caution. In his investor letter, released before Iran's bombing of Israel, Jamie Dimon remarked that, "Recent events, however, may very well be creating risks that could eclipse anything since World War II — we should not take them lightly."

Expansion in this environment is likely to be cautious.

M&A revenues are still low, other businesses are not thriving

The revenue recovery is not universal. In investment banking, it's limited to the equity and debt capital markets (DCM) businesses. In equities sales and trading, revenues increased only marginally. In fixed income sales and trading, revenues were up at Goldman but down elsewhere, as macro revenues suffered.

Jane Fraser, Citigroup CEO observed that revenues were "low across the street." Fraser said she was,"cautiously optimistic,” which didn't really sound all that bullish.

Deals were simply brought forward

Even in the areas of investment banking that did well in the first quarter, there were intimations that things weren't great. JPMorgan CFO Jeremy Barnum said, "quite a high percentage of the total amount of debt that needed to be refinanced this year has gotten done in the first quarter."

Fixed income revenues might not be sustainable

Even at Goldman Sachs, where fixed income sales and trading revenues were strong in the first quarter, there was caution that it might not endure. "I certainly wouldn't say this was what we'd expect to be an average quarter," said Solomon. Mean reversion may follow.

Barnum was more optimistic. But although he said higher markets revenues "seem to be the new normal" and that markets revenues have seemingly "stabilized at meaningfully above what was normal in the pre-pandemic period," he confessed there's some apprehension that there could be "downside" in the future.

People are being moved internally

Instead of hiring externally, banks are inclined to fill gaps by moving people internally. Bank of America has been doing a lot of this, for example, and it's not clear how many of its 185 new mid-market bankers joined from elsewhere.

There's still a staff overhang

Banks cut staff when investment banking revenues fell in 2022, but they didn't cut staff in proportion to the decline. Coalition Greenwich says operating margins in the investment banking division were 34% in 2019, but just 19% last year. As revenues recover, banks will want to get back to historic margins instead of hiring and adding cost.

Three big reasons why US banks will start hiring again. 11 small reasons why they won't (1)

Hiring is very targeted

To the extent that investment banking talent is being hired this year, it's only in key areas. At Citi, for example, the focus is mostly on "high growth sectors" like healthcare and technology.

Writedowns are becoming an issue

The commercial real estate monster is still lurking in the corner. At Bank of America, non-performing loans in the banking division went from $1bn in the first quarter of 2023 to $3bn in the first quarter of 2024, contributing to a 23% decline in net income in the business over the same period.

It's a long term play

Even the most bullish banking CEOs are admitting that a single strong quarter is not a sign of summer. "I am quite bullish about the full investment bank capability for those that have a global reach," said Pick at Morgan Stanley, before adding that, "it could take several years and have some lumpiness along the way. But I think the next three, four, five years will be quite active."

The capital rules are coming

Lastly, as they currently stand, the incoming Basel III capital rules will cause problems for US banks, and for their trading businesses in particular. Writing in this month's investor letter, Jamie Dimon said the new rules stand to increase capital requirements by 50% for major US banks and that this would discourage those banks from engaging in market making (sales and trading) activity.

Banks will be hesitant to invest until the rules are finalized.

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Three big reasons why US banks will start hiring again. 11 small reasons why they won't (2024)


Three big reasons why US banks will start hiring again. 11 small reasons why they won't? ›

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates. The majority of those banks are smaller lenders with less than $10 billion in assets.

Why are US banks struggling? ›

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates. The majority of those banks are smaller lenders with less than $10 billion in assets.

Is the US bank in trouble? ›

Read the CFPB's order. Read the CFPB's 2022 action against U.S. Bank. In its previous action against the bank, the CFPB fined U.S. Bank $37.5 million for illegally accessing its customers' credit reports and opening checking and savings accounts, credit cards, and lines of credit without customers' permission.

Are banks failing in 2024? ›

State regulators closed Republic First Bank in April 2024, marking the first bank failure of the year. Fulton Bank entered into an agreement with the FDIC to purchase most of Republic First's $6 billion in assets and to assume most of its $4 billion in deposit liabilities.

Why do small banks fail? ›

Banks can fail for many reasons, but generally they fall into a few broad categories: a run on deposits (which leaves the bank without the cash to pay everyone who wants to withdraw their money); too many bad loans or assets that fall precipitously in value (both of which erode the bank's capital reserves); or a ...

Why banks are closing in usa? ›

Bank Closures in 2023

In 2023, America saw its highest amount of bank closings since the 2008 recession. The increase in mobile banking use, inflation and interest rates, and real-estate struggles all contributed to why 2023 experienced so many banks shutting their doors.

How many US banks have failed? ›

Since the establishment of the FDIC in 1934, there have been 3,516 bank failures in the United States. Most of them are small banks and go largely unnoticed, except if you happen to have deposits at that institution.

Is the U.S. Bank under investigation? ›

On July 28, 2022, the Bank entered into a Stipulation agreeing to the issuance of a Consent Order from the CFPB. The Consent Order fined U.S. Bank $37.5 million after it was discovered that U.S. Bank employees were allegedly accessing customers' credit reports and other personal data to open unauthorized accounts.

Is Bank of America in danger of failure? ›

While there are always risks involved in the banking industry, Bank of America does not appear to be in imminent danger of collapse. However, customers and investors should always monitor the bank's financial health and risk profile and stay informed of any changes or developments that may affect the bank's stability.

Is there a lawsuit against U.S. Bank? ›

The lawsuit, entitled Williams v. U.S. Bancorp Investments, Inc., et al., is currently pending in San Francisco County Superior Court, Case No. CGC-10-499011.

What banks are most at risk? ›

Which Bank Stocks Are Most at Risk of a Liquidity Crisis?
  • Zions Bancorp NA. (ZION)
  • Signature Bank. (SBNY)
  • Huntington Bancshares Inc. (HBAN)
  • SVB Financial Group. (SIVBQ)
  • First Republic Bank. (FRCB)
Mar 15, 2023

Are banks in danger of failing? ›

The actual market value of assets in the U.S. banking system is $2.2 trillion lower than the stated value of these assets. A substantial number of institutions are at risk of failing should there be a run on these banks by uninsured depositors.

Which bank failed recently? ›

Signature Bank failed on March 12, 2023. Silicon Valley Bank failed on March 10, 2023. Almena State Bank failed on October 23, 2020. First City Bank of Florida failed on October 16, 2020.

Why are banks starting to collapse? ›

As the Federal Reserve began raising interest rates in 2022 in response to the 2021–2023 inflation surge, bond prices declined, decreasing the market value of bank capital reserves, causing some banks to incur unrealized losses; to maintain liquidity, Silicon Valley Bank sold its bonds to realize steep losses.

What banks are in financial trouble? ›

About the FDIC:
Bank NameBankCityCityClosing DateClosing
Republic First Bank dba Republic BankPhiladelphiaApril 26, 2024
Citizens BankSac CityNovember 3, 2023
Heartland Tri-State BankElkhartJuly 28, 2023
First Republic BankSan FranciscoMay 1, 2023
56 more rows

What is the largest bank to fail? ›

The largest bank failure ever occurred when Washington Mutual Bank went under in 2008. At the time, it had about $307 billion in assets. During the uncertainty of the banking crisis, however, Washington Mutual experienced a bank run where customers withdrew almost $17 billion in assets in less than 10 days.

Why is my US bank declining? ›

Attempts to exceed your daily transaction amount. Lack of available funds. Expired card information is being used. Possible magnetic strip damage (in this case, you'll need a new card).

Which bank is safest in the USA? ›

Summary: Safest Banks In The U.S. Of May 2024
BankForbes Advisor RatingProducts
Chase Bank5.0Checking, Savings, CDs
Bank of America4.2Checking, Savings, CDs
Wells Fargo Bank4.0Savings, checking, money market accounts, CDs
Citi®4.0Checking, savings, CDs
1 more row
May 9, 2024

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