The biggest US banks boosted their headcounts last year, even as some Wall Street firms cut positions to rein in expenses and rework their operations.

JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley all bumped up staffing levels between the fourth quarter of 2021 and the end of last year. Citigroup’s increase was the biggest, with 17,000 employees added last year.

Many of the banks said expenses were elevated by bigger headcounts and investments in technology. New York-based Citigroup, for its part, has added thousands of workers as it seeks to beef up its underlying risk-management and control systems. Those efforts are part of the company’s efforts to satisfy a pair of consent orders it received from regulators in 2020.

“Business was weak in 2022, but banks chose to hang on to employees for another year as it was hard to get a definitive read on the economic data that was developing over the course of 2022,” said Drew Pascarella, a senior finance lecturer at Cornell University’s SC Johnson College of Business. “Now that 2023 is shaping up to be weak, banks have the data they need to act now.”

Among the country’s biggest banks, Wells Fargo & Co. was the sole outlier, with its headcount shrinking by 10,737 positions over the course of last year. The San Francisco-based bank has been focused on bringing down its expenses and shrinking its mortgage business, once the largest among US lenders, amid falling demand for home loans.

Wall Street Increases Headcount | Five of the six largest US banks added to their workforces in 2022
Even with workforces growing last year, some banks are still moving to slash positions in certain businesses as a slowdown in dealmaking and a bevy of economic headwinds cut into their earnings.

“Banks are sort of cleaning up,” said Michael Karp, chief executive officer of Options Group, a firm offering executive-search assistance and other employee services. “They’re looking back and seeing that they have to cut back.”

Morgan Stanley will reduce its global workforce by about 1,600 employees after its headcount increased from about 60,000 just before the start of the pandemic to north of 80,000 at the end of the third quarter, Bloomberg News reported last month. Earlier this month, Goldman Sachs embarked on one of its largest round of job cuts ever, with plans to eliminate about 3,200 positions as it continues to struggle with runaway expenses.

“It’s a difficult decision to do a job cut like that,” Goldman CEO David Solomon said in a CNBC interview Wednesday. “The environment has changed and we’ve made the decision, and it’s a reset. I think it was the right decision, and it’s positioned us very well as we go forward. I hate the fact we had to do it.”

The New York-based firm reduced headcount in the fourth quarter of last year, though it still increased the overall size of its workforce from the end of 2021.

While Bank of America executives, in discussing fourth-quarter results last week, emphasized that they weren’t considering a major workforce reduction, Bloomberg News reported Wednesday that the bank is telling executives to pause hiring except for the most vital positions as a cost-saving measure.

Headcount is one area banks always scrutinize in an effort to save on compensation and drive returns higher, Karp said.

“Banks will have to sort of reassess,” he said. “It all depends on how they perform on a quarterly basis.”

This article was provided by Bloomberg News.