With Good Friday upon us, news today is centering on more i-bank layoffs amid a troubled market for MBS and related securities; which means this won't be the sort of holiday that many on the Street might have liked. The New York Post's Zachery Kouwe reported Friday morning that Goldman Sachs will cut up to 15 percent of its workforce in capital markets and related areas -- the Wall Street giant currently employs 32,000. Affected employees were allegedly notified this week of their fate. Earlier this week, Goldman posted a better-than-expected quarterly profit of $1.5 billion in the first quarter, although its fixed income division absorbed $1.8 billion in total writedowns and saw its revenue contribution fall 88 percent versus year-ago levels. Goldman, however, isn't alone. Rumors surrounding more cuts at Citigroup Inc. have proven to be true, with the Wall Street Journal reporting Friday that the company plans to lay off another 2,000 employees from its invement banking unit. That's on top of 4,000 job cuts disclosed in January. The WSJ cites a Citi spokesperson describing the cuts as what can only be described as a case of Jack Welch-style leadership on steroids:
"Each year, we identify the bottom 5% of performers in the Institutional Clients Group, and some number of these people leave the firm," said Dan Noonan, a spokesman for Citigroup. "This year we will have a larger number of reductions as we continue to strengthen the business and lower our expense base."
With that as the cheery backdrop, one source that wrote to HW earlier in the week said that many traders in the secondary mortgage market are simply biding their time until the inevitable pink slip arrives. "Imagining the landscape over the next few years is like listening to 'Empty Chairs at Empty Tables' from Les Miserables over and over," said the source. "All my friends are counting the days till gone."