Lazard Cuts Workforce by 10% as CEO Sees Slump Through 2023

Lazard Ltd. reported an unexpected loss in the first quarter and said it planned to cut 10% of its personnel this year, forecasting that the industry's dealmaking downturn will extend until 2023.

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"To be honest, things aren't feeling as good as they were in December or January," CEO Ken Jacobs remarked over the phone. "It's time to take action. That's pretty much it."

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According to Trade Algo, investment banking revenues at the five largest Wall Street banks fell by 49 percent last year as Russia's invasion of Ukraine roiled markets and dampened business confidence. Capital market activity has been hampered by the Federal Reserve's vigorous drive to manage inflation by raising interest rates.

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Wages on Wall Street have risen in recent years as junior bankers requested better pay and senior bankers profited from an industry boom. Even in the present slump, incomes remain stagnant, according to Jacobs, but prices associated with travel, entertainment, and information services have risen. As the dealmaking environment remains subdued, the CEO believes his competitors will cut jobs as well.

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Many major banks have already begun. Citigroup Inc. has cut hundreds of employees across the board, accounting for less than 1% of the workforce. JPMorgan Chase & Co., the largest bank in the United States, has laid off hundreds of mortgage workers, while Goldman Sachs Group Inc. went on one of its largest rounds of layoffs ever in January, announcing plans to eliminate thousands of positions throughout the organization. 

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The news indicates that around 340 positions would be lost at Lazard, which had approximately 3,400 workers as of the end of March. According to a statement, the shift cost $21 million in the first quarter, and the business estimates an additional $95 million in expenses. 

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Lazard's first-quarter financial-advisory revenue declined 29 percent year on year to $274 million, falling short of the $296 million projection in a Bloomberg News poll of analysts. Revenue from asset management fell 15% to $265 million.

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The adjusted loss per share was 26 cents, compared to an average profit per share projection of 30 cents.

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Many of the firm's expenses are difficult to cut, according to Jacobs. "You can't easily lower salaries because we are price takers on travel and entertainment," he explained. "It's extremely difficult to reduce pay, especially in an environment where inflation is rampant."

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