Approximately 2.5% of BlackRock Inc.’s global workforce will be let go, or about 500 workers, after the largest asset manager in the world struggled with severe drops in the equity and bond markets last year.
CEO Larry Fink and President Rob Kapito stated in a staff memo seen by Bloomberg on Wednesday that “the uncertainty around us makes it more important than ever that we stay ahead of changes in the market and focus on delivering for our clients.”
The headcount at New York-based BlackRock will be 5% greater than it was a year ago despite this being the first wave of job layoffs since 2019. At the end of September, the company, announcing its fourth-quarter earnings on Friday, employed about 19,900 people.
Rising interest rates and soaring inflation have rocked the markets and asset managers, with the S&P 500 falling 19% last year. In 2022, BlackRock stock fell 23%. The company, which managed $7.96 trillion in assets at the end of the third quarter, did not identify the industries most negatively impacted by the job cuts. In the memo, Fink, 70, and Kapito, 64, pledged to “control expenses responsibly” and make cost-effective investments.
The management wanted to highlight the company’s capacity to increase customer revenue. Through the first nine months of last year, investments in its long-term funds increased by $250 billion. According to analysts surveyed by Bloomberg, they will likely bring in an additional $116 billion in the fourth quarter.
“Our breadth and resilience,” Fink and Kapito wrote, “enable us to play offense when others are pulling back.”
Apart from BlackRock, Goldman Sachs is also processing of layoff
On Wednesday, layoffs took place all across Wall Street, with BlackRock laying off up to 500 workers and Goldman Sachs beginning the process of laying off more than 3,000 employees.
The cuts come after a disastrous 2022 for the markets, which saw a decline brought on by the Russian invasion of Ukraine, inflation, and rate hikes. Due to this, dealmaking drastically decreased, and leading investment companies saw a decline in revenues and assets under management.
Even though the reductions affect thousands of employees, only a small portion of the entire headcount—roughly 6.5% at Goldman Sachs and less than 3% at BlackRock—has been affected.
Nevertheless, it stands in stark contrast to prior years, when Wall Street was booming. In 2020 and 2021, Goldman omitted their yearly personnel purge.
As other significant corporations adapt to the new economic realities, the layoffs on Wall Street are unlikely to be the last. Those who are still employed will probably learn about their bonus in the upcoming weeks. When each bank is expected to announce bonus payouts is listed by Insider. When they are spoken, many people anticipate disappointment.