Wall St. Downsizes Holiday Parties

In the year of Hurricane Sandy, looming fiscal austerity and global scrutiny of banks, Wall Street is just not in a celebratory mood.

Banks that once took over entire floors of Manhattan nightclubs and reserved Midtown steakhouses are continuing to follow restrictions on the office holiday party, many of which have been in place since the 2008 financial crisis.

Witness the scene at the 40/40 Club in New York's Flatiron district on a recent December evening. There was no lavish, companywide affair; instead, a group of 40 Morgan Stanley employees gathered in a private room off to the side of the club.

The generous platters of sliders and lobster crab cakes were present. But instead of Grey Goose vodka, there was Smirnoff and Stolichnaya.

“It's probably not going to be caviar and ice sculptures, but it's still going to be something,” said Dale Winston, chief executive of the executive search firm Battalia Winston.

Intimate group gatherings, paid for out of pocket by department heads and managing directors, are the new norm. With tighter budgets and dwindling salaries, investment bankers in the bulge bracket can hardly count on dinner, let alone top-shelf liquor.

Smaller holiday gatherings mean more face time with superiors and less opportunity to let loose. A Morgan Stanley financial adviser in Los Angeles described the new, austere conditions as “stiff and boring.”

“I went and made sure my managing director saw me, and then I just left,” he said. “They've taken what used to be a party and have reduced it to an event where people just meet up and chat.”

While the parties are a subject of much conversation, few if any lower-ranking employees are willing to discuss them on the record. Under stern orders not to talk to reporters about anything - including seating arrangements at company get-togethers - workers insisted on anonymity to describe the holiday merrymaking.

Neither Mo rgan Stanley nor Credit Suisse held company-sponsored holiday parties this year. Citigroup, Deutsche Bank, Barclays and the investment banking division of Bank of America decided against them as well, but departments can do as they please as long as the costs come from their own accounts. Representatives of Morgan Stanley, Credit Suisse, Bank of America and Barclays declined to comment.

The restaurants and other sites the banks once frequented say they are feeling the pinch as “budget conscious” has become a motto of party planners.chains that Wall Street might once have considered déclassé are being welcomed by the staff in accounting.

For example, Brother Jimmy's, a barbecue restaurant with a number of Manhattan locations, catered many more in-house celebrations this year for corporate clients, including major banks, said a spokeswoman, Jenna Fritsche.

The reluctance of Wall Street firms to return to sponsored parties runs contrary to a general resu rgence of corporate holiday celebrations. In its annual study, Battalia Winston found that 91 percent of the 105 companies surveyed planned to hold a party this year, up from 74 percent in 2011.

“The banks are still image-conscious,” Ms. Winston said. “It's hard to have a party when you're laying people off.”

Restaurants and clubs have responded accordingly, convinced that the belt-tightening is here to stay.

“People aren't just going to say, ‘I have $10,000, throw me a party,' ” said Lauren Menache, a publicist for Berk Communications in New York, which represents high-end group dining spots like Junoon and those owned by the restaurateur Richard Sandoval. “They really want to try and understand where their money is going.”

This year, sites like the 40/40 Club, once the beneficiaries of opulent affairs, have shifted their focus to enticing smaller groups with specific food and drink packages.

“Companies are dividing up and h aving smaller events,” said Amber King, director of sales at the 40/40 Club, who has booked parties for three Credit Suisse groups this holiday season, charging around $60 to $150 per person. “That's how they are maintaining costs. Instead of a 500-person gala, firms are holding more intimate, 10- to 80-person events.”

Still, the lavish party hasn't completely become a Wall Street myth. Companies in the private equity and hedge fund sectors - which tend to face less public and shareholder scrutiny than investment banks - are free to spend whatever millions their annualized returns will bear.

The downsized gatherings present new challenges to Wall Streeters, particularly younger employees at investment banks. Some have realized that because of budgetary pressures, financial modeling skills won't necessarily guarantee them continued employment or a big year-end bonus. With this in mind, small holiday parties can be an opportunity to impress their bosses with their social panache.

“Even though groups are more aware of their cost structures, the holiday party is still a big deal,” a Credit Suisse analyst said, adding that the senior members of his group came around the day of the party and made sure everyone put work aside to attend.

“It's huge in my eyes to have a group outing,” another analyst said. “The associates you get to know because you work with them until midnight all the time, but the senior guys leave at 6 and you don't get to chat with them much, so I'm looking forward to it.”

A version of this article appeared in print on 12/21/2012, on page B5 of the NewYork edition with the headline: Wall St. Downsizes Holiday Parties.