Wall Street banks are adjusting to a more sluggish economic environment by laying off staff even as they compete to retain and recruit top talent, Kenneth Jacobs, Chief Executive Officer of Lazard Ltd, told investors at a conference Wednesday.

"Reality is starting to set in," said Jacobs, who was speaking generally about job cuts that were being reported across the financial industry.

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• US Banks Warn of Recession Risk
• Morgan Stanley Lays Off 1,600 Workers as Recession Fears Grow
• Goldman Slashes Traders' Bonuses