Bank of America is considering downsizing and things do not look so well for employees of the investment bank

Bank of America Corp. becomes the latest addition to a growing list of Wall Street firms that have begun to prune their workforces. The bank plans to cut a number of jobs in its investment bank as the business struggles to bear the weight of the financial burdens of the year.

The number of job cuts is still under discussion and is expected to affect less than 200 bankers worldwide, according to insider sources. Although the number of laid-off employees is lower, this move by the employer reflects how the firm is beginning to go beyond the hiring freeze it announced earlier in the year, taking the company back to a pre-pandemic level of workforce trimming.

This goes to show how the finance industry will continuously rely on reducing the headcount to manage costs. If the stock sales and acquisitions do not become significant, the firms that have cut off employees will need to consider other options.

The finance industry saw a large number of layoffs within these few months. News of Citigroup Inc. terminating dozens of employees in its investment-banking division began spreading around in November last year, which was followed by Morgan Stanley trimming 1,600 employees in December in a much larger-scale layoff. With over 3,200 of its staff fired, Goldman Sachs Group Inc. stole the spotlight last month.

Bank of America will begin eliminating employees in the coming weeks. However, the decisions are still being made. Bank of America’s investment-banking revenue dropped by 54% to reach a total of $1.09 billion in the fourth quarter. The biggest decline was seen in the underwriting of equities deals, which got reduced by 65% to reach $189 million. Debt underwriting also took a plunge by around 58%.

There’s not much possibility for investment banking revenue to rebound anytime soon. The fee income will remain muted at four of the biggest Wall Street banks, according to analysts’ predictions. As announced by Chief Financial Officer Jeremy Barnum this week, the investment-banking revenue at JPMorgan Chase & Co. for this quarter could be down 20% from last year’s $2.1 billion.

Bank of America is now operating with the motive of bringing their expenses down and moving the headcount back to the historic norms. The finance giant kept adding to their headcount even when the net income for the fourth quarter of 2022 fell to $27.5 billion from a record $32 billion in the previous year. By the end of 2022, the overall headcount of the employer was 216,823. In the earlier year, this figure was 208,248.