Goldman Sachs is preparing to lay off up to 3,200 workers this week
Goldman Sachs is expected to cut around 3,200 jobs as early as Wednesday as it braces for difficult economic conditions, including recessions in many key markets.
The investment banking giant will cut about 6.5 percent of its 49,000 workforce, including cuts in its core trading and banking units, according to Bloomberg.
The company is also expected to shed hundreds of jobs at its loss-making consumer business after scaling back its Marcus direct-to-consumer division.
It follows a dramatic slowdown in mergers and acquisitions as higher interest rates affect valuations, prompting CEO David Solomon to warn of impending layoffs in a memo last month.
Goldman Sachs is expected to cut around 3,200 jobs starting this week after CEO David Solomon (above) issued a memo warning of layoffs last month
Goldman Sachs shares are down 3% over the past month as the company braces for a recession
It’s unclear where the job cuts will take place, but the company’s largest footprint is in the United States, where it has more than 25 offices.
Goldman Sachs also has six offices in the UK, including in London, where it is expected to employ around 6,000 people, as well as in Birmingham and Milton Keynes.
Last month, CEO Solomon reportedly sent a memo to employees at the end of the year warning that headcount will be reduced in the new year.
“We are conducting a careful review and while talks are ongoing, we expect our downsizing to take place in the first half of January,” Solomon said in the memo, according to Bloomberg.
‘There are a variety of factors affecting the business landscape, including tightening monetary conditions slowing economic activity. Our leadership team is focused on preparing the company to weather these headwinds,’ he added.
Goldman Sachs had significantly increased its workforce since 2020 as it looked for growth opportunities in the wake of the pandemic.
Even if Goldman Sachs cut its workforce by 3,200 employees, it would still have more employees than in 2021
Banks generated nearly $71 billion in US investment banking revenue last year, according to Dealogic. Investment banking revenue in the United States is expected to have fallen more than 50 percent from a year earlier
However, institutional banks have been hit by a significant slowdown in activity in recent months due to volatility in global financial markets.
The annual bonus season is set to kick off this week when JP Morgan, Citi and Bank of America all report their results for the past year.
The drop in transaction activity is expected to result in a significant drop in bonus payments.
In December, the Financial Times reported that Goldman Sachs was considering cutting its bonus pool for investment bankers by at least 40 percent this year to keep costs under control.
Goldman Sachs will report its own fourth-quarter results on Jan. 17. The company declined to comment.
It’s been a turbulent year for the investment bank, whose share price has fallen 12.8 percent over the past 12 months.
Morgan Stanley and Citigroup have also recently made layoffs as the banking giants return to pre-pandemic annual weeding of underperformers.
Goldman Sachs headquarters is seen above. The bank is preparing for layoffs following job cuts at Morgan Stanley and Citigroup
Most investment banks cut the bottom 1 to 5 percent of employees just before bonus time to free up more bonus funds for those who remain.
Even if Goldman Sachs cut its workforce by 3,200 employees, it would still have more employees than in 2021.
The company has been on something of a hiring frenzy since it was acquired by Solomon in 2018, when Goldman Sachs retained 36,300 employee positions, unchanged from the previous year.
In 2019, the workforce then increased to 38,300 and in the following year to 40,500. From 43,900 in 2021, the number rose by more than 5,000, one of the biggest spikes in the bank’s recent history.
However, Solomon previously warned that the bank needs to cut costs, with the threat of staff cuts among long-planned initiatives to save money.
“We continue to see headwinds in our expense positions, particularly in the near term,” Solomon said while speaking at a conference last month. “We have put certain cost reduction plans in place, but it will take time for the benefits to be realised.
‘Ultimately, we will remain agile and size the company to reflect the opportunities on offer.’
https://www.dailymail.co.uk/news/article-11614905/Goldman-Sachs-prepares-cut-3-200-workers-week.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 Goldman Sachs is preparing to lay off up to 3,200 workers this week