Slashed earnings spur hundreds of Raymond James layoffs
St. Petersburg, Florida-based Raymond James plans to lay off hundreds of employees, matching a trend among banks as the coronavirus pandemic continues its downward influence on the economy and earnings.
About 500 of the company's 13,900 employees, or 4% of the global workforce, will be impacted, a spokesperson said. The cuts were announced Tuesday.
The company wouldn't say if the layoffs include employees in the public finance group.
"We are not sharing impacted associate details by location or function, but the majority of the positions were in corporate departments around the country and internationally," the spokesperson said.
Raymond James had experienced years of record-breaking growth heading into 2020, Paul Reilly, the company's chairman and chief executive officer, told employees in a memo announcing the cuts.
"We were not anticipating a pandemic and the corresponding economic conditions and rate cuts that effectively wiped out half our earnings," he said. "This has been a year like no other."
Reilly said without any other choices available that the decision to eliminate jobs as part of overall cost controls was difficult.
"I assure you we have taken extraordinary steps to take care of every impacted associate," he wrote. "To support their transition, we are providing a full year’s bonus for fiscal 2020 and have expanded our severance policy that increases payment to up to a year of total compensation for our more tenured associates."
Because the country continues to experience the "enduring the reality of COVID-19," he said those laid off in the U.S. will also receive a year of company-paid medical benefits and professional job placement support. Reilly said employees in other countries will receive similar support, but he was not specific.
In the company's third quarter earnings call July 30, Reilly said fixed income accounts generated record revenues and pretax income despite lower short-term interest rates and economic uncertainty associated with COVID-19.
Raymond James continued to recruit high quality financial advisors, reaching a new record of 8,155, up 251 new advisors over June of 2019, he said.
"We're also entering the fourth quarter of a healthy investment pipeline," Reilly said. "We generated quarterly net revenue of $1.38 billion, down 5% compared to prior year third quarters, and [down] 11% compared to the preceding quarter" of 2020.
In Tuesday’s memo, Reilly said he and members of the senior leadership team will also take pay cuts.
“We do not intend to have another round of job eliminations,” he said.
The company is also undertaking a multi-year review to identify efficiencies, and will “continue to develop a forward-looking real estate strategy reflecting advances in remote work and changing client expectations,” Reilly added.
Listed as RJF on the New York Stock Exchange, Raymond James' stock sold at $75.92 Wednesday afternoon, up $1.52.
Raymond James joins a number of investment banks announcing workforce layoffs as the pandemic and low interest rates affect earnings.
American Banker reported Tuesday that Citi will resume job cuts, ending an earlier promise to pause staff reductions. The layoffs will affect less than 1% of the bank’s global workforce, the company said in a statement.
Wells Fargo announced Monday that it plans to cut $10 billion in expenses, mostly in layoffs over four years.