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| Wall Street bull ANGELA WEISS/AFP via Getty Images |
Wall Street is riding a wave of renewed optimism as dealmaking bounces back faster than many analysts expected, but the hiring market tells a far less buoyant story. Over the past quarter, big banks have impressed investors with robust earnings from mergers, acquisitions, and public offerings, yet job creation has lagged behind the surge in activity. While trading desks and advisory teams are celebrating a busier season, layoffs and selective recruitment are still shaping the employment landscape across the financial sector.
In July, major banks posted stronger-than-anticipated results in their investment banking divisions, with the rebound driven by an uptick in high-profile IPOs — such as the highly anticipated public debut of design software firm Figma — and a fresh burst of M&A activity. According to a new KPMG report, second-quarter deal values climbed 22% from the prior quarter, reaching $123 billion. This marked a welcome change from the subdued pace seen earlier in the year, injecting a dose of confidence into equity capital markets teams and advisory practices.
Private credit players have also been reaping the rewards of the dealmaking revival. At Apollo Global Management, CEO Marc Rowan described a summer of intense activity, noting that July was “among the busiest” in the company’s history. In his view, the spike in in-office presence reflected the industry’s renewed energy and a sense of urgency to seize opportunities.
Still, beneath the headline figures lies a more complicated reality. Several investment banks have quietly continued trimming headcount, even as revenues improve. Bonus forecasts for year-end remain cautious in areas such as M&A advisory and private equity investing, and widespread hiring has yet to return. Executives continue to stress “efficiency” in operations, often citing the twin pressures of geopolitical volatility — including President Trump’s tariffs — and the transformative, sometimes disruptive, effects of artificial intelligence on banking workflows.
Eric Li, an analyst at financial services research firm Crisil Coalition Greenwich, voiced his surprise at the level of layoffs still occurring during the summer months. “Investment banking numbers actually beat estimates by a long margin, and people are still doing layoffs in July and August,” Li said, calling the moves “not really rational” given the stronger performance. He pointed to persistent uncertainty as the main culprit, with companies holding onto cash reserves in preparation for potential economic turbulence.
From Uncertainty to AI Disruption
Goldman Sachs stands as a prime example of the contrasting trends. The bank’s investment banking fees jumped 26% in the second quarter, with M&A advisory revenue surging over 70%. Yet Goldman’s headcount fell by around 2% to 45,900 employees, and a New York State WARN notice indicated that 338 New York City-based staffers would depart later in August. The bank insists these cuts are tied to its annual performance review process — not a reflection of business conditions — and notes that many of the positions will eventually be refilled.
Other institutions have also made structural adjustments. Barclays cut members of its Los Angeles financial sponsors team as part of a broader reorganization, with some roles expected to relocate to San Francisco under the direction of a newly appointed managing director. Meanwhile, JPMorgan Chase has adopted a more defensive stance, with CFO Jeremy Barnum urging managers to “resist” unnecessary hiring and instead focus on operational efficiency.
Some industry veterans attribute the shift in staffing patterns to the growing role of private credit, which has siphoned certain types of transactions away from traditional investment banks. “What traditionally used to be done at some of the larger banks has now moved into some of the larger alternative asset managers and insurance companies,” said one senior banker, who spoke anonymously to discuss internal dynamics.
A More Targeted Approach to Recruitment
Although large-scale hiring has stalled, banks are still selectively recruiting for high-value roles. Sophia Samadian, an investment banking recruiter with Selby Jennings, said firms are increasingly quick to lock in “strategic” talent when the right candidate appears. This approach signals that momentum could be building, even if the overall hiring pace remains subdued.
Some smaller and boutique firms are seizing the moment to strengthen their teams ahead of an anticipated busier second half. Jefferies recently poached several senior technology bankers from Guggenheim Partners to expand its Bay Area presence, while Evercore hired a top JPMorgan industrials banker in July to serve as a senior managing director. Moves like these suggest that while the largest institutions remain cautious, there is still competitive demand for specialized expertise.
However, even a full return of M&A volumes to the record levels of 2021 may not trigger a broad hiring spree. Chris Connors, a principal at compensation consultancy Johnson Associates, predicts that bank headcount will “trend lower” over the long term, as automation and AI take over more functions. “I don’t think you’re going to see gangbusters hiring,” Connors said, forecasting a continued emphasis on strategic, targeted recruitment rather than mass onboarding.
For now, Wall Street’s recovery is a tale of two tracks: deal activity is gaining speed, but staffing decisions remain conservative, shaped by caution over the economic outlook and the potential efficiencies offered by new technologies. Investors may cheer the revival of the investment banking pipeline, but for those seeking jobs in the sector, the road back to widespread hiring looks set to be a slow and selective one.
