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(Rewrites throughout, adds details on other bank announcements,
quote from consultant)
By Elizabeth Dilts Marshall and Imani Moise
March 26 (Reuters) - Big banks are postponing decisions
about staff cuts as the coronavirus hits their businesses hard,
with executives saying they are unsure how long the outbreak
will hurt the economy and worried about being unprepared if
business suddenly snaps back.
Morgan Stanley, Goldman Sachs Group Inc,
Deutsche Bank, HSBC Holdings PLC and
Citigroup Inc were among those on Thursday reassuring
staff privately or through public statements that job cuts are
not on the table.
Banks are hesitant to make changes because the future is so
uncertain, executives and external consultants told Reuters.
"You would be fibbing if you said we can really make
guarantees or assurances to you," said compensation consultant
Alan Johnson. "There's a danger of making promises that you
ultimately can't keep. Nobody knows."
There could be a sudden surge in activity once cities
re-open, people get back to work and markets normalize in a few
months – leaving banks unprepared if they fire staff that seem
unnecessary at the moment. Or, the coronavirus could cause a
slow, grinding global recession that lasts much longer.
Banks are will be also hesitant to announce layoffs in the
event that the pandemic leads to staffing shortages as employees
fall ill or choose to stay home, a bank source said.
The industry is also aware of the politics of firing people
while benefitting from Federal Reserve progams that have
injected trillions of dollars into markets.
The eight biggest U.S. banks decided to stop share
repurchases and may cut dividends to show they are not using
money unwisely. Wall Street is also expected to slash bonuses
this year. [nL1N2BB2LP ]
A prominent group of socially-minded investors issued a
statement on Thursday urging companies to offer paid leave and
remote work options during the coronavirus – anything they can
do to avoid job cuts.
Morgan Stanley has made the boldest statement so far among
big banks, with Chief Executive James Gorman saying jobs are
secure through the rest of 2020.
"At the end of this year, we will know what we are dealing
with, and hopefully the economy will be on the mend by then,"
Gorman said in a memo to all 57,000 employees on Thursday.
Citigroup CEO Mike Corbat ordered a suspension of any
planned staff cuts, a person familiar with the matter told
Reuters.
A Goldman Sachs spokeswoman said that bank has not made any
decisions to cut staff this year because of the coronavirus.
HSBC said it would hold off on previously announced reductions.
JPMorgan Chase & Co declined to comment and Bank of
America Corp did not respond to a request for comment.
Banks are usually quick to fire staff in hard times and hire
again when economic or market conditions get better. The
coronavirus is an oddity because it is not clear how long the
economic impact will last; because banks are, for once, not the
center of the crisis and therefore financially-sound; and
because the industry is especially sensitive to the politics of
cutting staff at a time when the rest of the world is suffering.
"Way too many people have lost their jobs overnight," Gorman
wrote in a note to staff. "Aside from a performance issue or a
breach of the code of conduct, your jobs are secure."
(Reporting by Elizabeth Dilts and Imani Moise in New York
Additional reporting by Noor Zainab Hussain in Bengaluru and
David French and Ross Kerber in New York
Writing by Lauren Tara LaCapra
Editing by Bernard Orr and Richard Chang)
