(Adds comments from Wells Fargo, Deutsche Bank)
By Elizabeth Dilts Marshall and Imani Moise
March 26 (Reuters) - Big banks are postponing decisions
about staff cuts as the coronavirus outbreak 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, Wells
Fargo & Co, Deutsche Bank AG, 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 now. Or the coronavirus could cause a slow, grinding
global recession that lasts much longer.
Banks 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 benefiting from Federal Reserve programs 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.
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 outbreak – 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.
German lender Deutsche Bank is pausing future job cuts to
give employees "additional certainty" during the outbreak, a
company spokesman said on Thursday. Wells Fargo is also
suspending new job cuts and paused "initiating new
displacements" as it evaluates the situation, according to a
spokeswoman.
A Goldman Sachs spokeswoman said the 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 conditions improve. 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 and Kanishka Singh
in Bengaluru and David French and Ross Kerber in New York
Writing by Lauren Tara LaCapra
Editing by Richard Chang and Leslie Adler)