By Siddarth S and Lananh Nguyen

NEW YORK (Reuters) – Investment bank Lazard (NYSE:) Ltd on Friday reported a surprise loss in the first quarter as dealmaking slumped, a trend the company’s CEO said would likely persist.

The company also warned of an uncertain outlook for the year and said it would eliminate around 10% of its workforce in 2023, which could result in additional costs of around $95 million.

“The environment has deteriorated since the end of last year. We don’t think there is an imminent recovery in the M&A (mergers and acquisitions) market and certainly completions are going to be muted through the end of this year,” CEO Kenneth Jacobs told Reuters in an interview.

Lazard has about 3,400 employees. Its workforce reduction will be broad-based and include markets in Latin America and the Asia Pacific, which account for a smaller chunk of the fees the company brings in from arranging deals, Jacobs said.

Major Wall Street investment banks including Morgan Stanley (NYSE:) and Goldman Sachs (NYSE:) have felt the brunt of a barren environment for M&A as rising interest rates, high inflation and fears of a recession soured the appetite for dealmaking.

M&A volumes nearly halved in the first quarter from a year earlier, according to data from Dealogic.

The banking crisis in the United States after the collapse of two lenders has fueled economic uncertainty, Jacobs said.

“This is one of the factors that is contributing to the uncertainty in the environment, particularly in the U.S. right now,” Jacobs said. “Given the events of the first quarter, there is a lot more uncertainty in the banking sector than there has been in a long time.”

The stresses in the regional bank sector could lead to a credit crunch, although he said it was too early to say how likely that would be or when it would occur.

The investment bank will be cautious on stock buybacks at the same time as looking for opportunities, he said.

Lazard’s financial advisory revenue drops on global dealmaking slump Lazard’s financial advisory revenue drops on global dealmaking slump – https://www.reuters.com/graphics/LAZARD-RESULTS/zgpobymwyvd/chart.png

Lazard’s operating revenue from its financial advisory business fell 29% to $274 million in the first quarter, when the company also recorded a $21 million charge from its cost-saving measures.

“Slower M&A activity resulted in significantly lower revenues in the quarter and the outlook for the year remains uncertain,” Jacobs said in a statement announcing the results.

A banking crisis last month also weighed on investor sentiment, prompting an outflow of client assets that has hit fees earned from asset management.

Revenue from the segment, which is highly focused on equities and fixed-income assets, dipped 15% to $265 million in the quarter ended March 31.

On an adjusted basis, Lazard reported a loss of $23 million, or 26 cents per share, compared with a profit of $115 million, or $1.05 per share, a year earlier. Analysts had expected a profit of 26 cents per share, according to Refinitiv IBES data.