NEW YORK -- First came layoffs at Morgan Stanley, then Shearson Lehman Brothers, Prudential Bache, Paine Webber, Merrill Lynch and First Boston. Given the way the month of November went for financial firms, only the small size of the layoffs announced at Alex. Brown Inc. came as any surprise.
The Baltimore-based investment bank confirmed yesterday that it had dismissed about 30 employees, about 1.7 percent of the staff. Almost all of the people affected were in Baltimore-based equity research, trading and underwriting operations. No other layoffs are expected in the weeks to come, but the firm declined to speculate about the more distant future.
"Business is difficult," said Donald Hebb, Alex. Brown's president. "We are looking at all areas. I can't say there won't be a few more [layoffs] in the next three or four months."
Recent staff cuts at major investment banks have averaged 3.5 percent to 4 percent, said Perrin Long, an analyst at Lipper Analytical Services, and reductions since the second quarter of 1987 have averaged about 20 percent.
Shortly before the October 1987 stock market crash, New York Stock Exchange member firms serving the public had 262,108 employees, according to Securities and Exchange Commission data, Mr. Long said.
By June of this year, that number had fallen to 216,550. Mr. Long estimates it had shrunk to 213,500 by September and that perhaps as many as 2,000 more jobs have been lost since then. Third-quarter data will be available soon.
"Everyone is going through it," Mr. Long said.
Before the staff cutback, Alex. Brown had gone against the prevailing trend. Its head count had expanded from 1,500 during 1987 and 1988 to 1,650 in 1989 and 1,750 recently.
The reduction follows a dramatic shift in the market for new equity offerings, a key area of business for Alex. Brown. The market was strong in the first half of the year but then weakened.
Despite the reductions, however, the firm's overall employment might dip only slightly by the end of the year. Mr. Hebb said openings remain in its retail brokerage division for experienced securities salesmen.
Several other lines of business, notably restructuring, mergers and asset management, continue to perform well.
"What we want to do is bring our costs to levels that make sense," Mr. Hebb said.
He added that the savings from the staff reductions "won't be significant."
None of the firm's analysts who retained national followings were involved in the cutback, nor were senior managers, Mr. Hebb said.
Meanwhile, other Wall Street firms that already have cut back have begun looking to other means to cut costs.
Merrill Lynch announced a freeze on hiring "effective immediately" and a freeze on merit increases for employees eligible for bonuses.
Merrill already had reduced its work force since the beginning of the year by 2,400, to 39,000, through the sales of Merrill Canada and the elimination of other operations, said Fred Yager, a company spokesman. In late 1987, Merrill had 50,000 employees.
Mr. Long speculated that some brokerage firms might move to cut core pay by 5 percent or 10 percent for all employees next year if conditions don't improve and still retain their staffs.
"In today's environment, where would they go to get another job? They will probably stay where they are and be thankful," he said.