Morgan Stanley CEO James Gorman’s declaration in a memo Thursday that the bank would not cut any jobs in 2020 spurred several of its peers to make similar assurances.
Bank of America CEO Brian Moynihan echoed Gorman's promise not to lay off staff this year in an interview with the Financial Times published Friday.
Wells Fargo said it would hold off on any staff cuts, likewise stressing the lift is subject to change. "We have paused initiating new displacements," Beth Richek, a spokeswoman for the bank, said Thursday in a statement, according to Bloomberg. "We will continue to evaluate during this fluid situation."
The moratorium isn't limited to banks. Visa CEO Al Kelly wrote in a LinkedIn post Thursday that he told employees the payment network would not institute any coronavirus-related layoffs. "There is enough sadness in the world and already too many families impacted by job losses," Kelly wrote. "I have no interest in contributing to that."
Uncertainty about the duration and impact of the COVID-19 crisis is forcing a wait-and-see approach. Although Moynihan said more of the virus’s impact "is ahead of us than behind us," some banks may be reluctant to make changes in case the disruption is brief. Banks that make cuts now may be ill-equipped to handle a surge in activity once markets normalize. If the pandemic drags on, however, banks could see staffing shortages as employees fall ill.
At least one industry expert said it’s too early to be making blanket assurances. "You would be fibbing if you said we can really make guarantees or assurances to you," compensation consultant Alan Johnson told Reuters. "There’s a danger of making promises that you ultimately can’t keep. Nobody knows."
Gorman acknowledged the unknown in his memo Thursday but made the pledge anyway. "I am sure some, if not many, of you are worried about your jobs," he wrote to bank employees. "While long term we can’t be sure how this will play out, we want to commit to you that there will not be a reduction in force at Morgan Stanley in 2020. Aside from a performance issue or a breach of the Code of Conduct, your jobs are secure."
Gorman added that, by year's end, "we will know what we are dealing with, and hopefully the economy will be on the mend by then."
Across the pond
The virus-influenced uncertainty may be even more pointed for European banks that were already planning massive cuts or restructurings. HSBC CEO Noel Quinn wrote in a memo Thursday that, "because of the extraordinary impact of the Covid-19 pandemic," the bank had decided to "pause, for the time being, the vast majority of redundancies" tied to its effort to shed 35,000 positions by the end of 2022. Banking Dive reported last week a delay in the restructuring was possible if the outbreak worsened.
Quinn also announced a hiring freeze, adding HSBC would "pause external recruitment, other than for a small number of front-line and business critical roles and those already with written offers."
Deutsche Bank, too, put thousands of job cuts on hold.
"To avoid additional emotional distress in the current environment, we will defer new communications of individual restructuring actions to potentially affected employees," the bank said in a memo seen by Bloomberg. "The pause will be in place until we see a return to greater stability in the world around us."
The German lender is also considering scrapping bonuses for top management this year. The bank announced in July that it planned to slash up to 18,000 jobs and spin off $83 billion in assets it no longer wants.
Likewise, the British bank Lloyds halted its effort to trim 780 jobs. "At this uncertain time, we have made the decision to stop the structural changes that were due to take place for some of our teams," a Lloyds spokesperson said by email, according to Bloomberg. "Our focus is on supporting our customers and colleagues during this unprecedented time."
Other banks are pushing ahead as before. UniCredit is in talks with worker representatives over its plan to cut 6,000 jobs — mostly through attrition and early retirements — in Italy, one of the countries hardest hit by the virus. A deal could be set as early as next month, a union official told Bloomberg.
Royal Bank of Scotland CEO Alison Rose is pressing on with her effort to slash the bank’s markets business, people with knowledge of the matter told the wire service.
Still other institutions — notably, Germany's Commerzbank and France’s Societe Generale — have said they'd slow the pace of cuts.
Among U.S. lenders, a Goldman Sachs spokeswoman told Reuters the bank had not made any decision to cut staff because of the coronavirus. JPMorgan Chase declined to comment.
Thursday’s chain reaction of statements on the coronavirus’s potential impact on staffing made clear that several banks would rather avoid the optics of pressing ahead with downsizing during a pandemic — especially, in the U.S., while benefiting from Federal Reserve programs that have supplemented the market with trillions of dollars.
Across the ocean, the downsizing effort may be hindered now that so many bank employees are working remotely. "You can’t fire a trader in Europe over the phone when he is either working from home or taking care of a sick family member," an HSBC source told Reuters.
"There is a question of decency," Societe Generale CEO Frederic Oudea said at a conference last week in reference to the timing of job cuts.