Goldman Sachs to cut several thousand employees
2022.12.16 11:48
Goldman Sachs to cut several thousand employees
Budrigannews.com – According to a person who is familiar with the situation, Goldman Sachs Group Inc. plans to lay off thousands of workers in order to deal with the challenging economic climate.
The cutbacks are the most recent sign that cuts are advancing across Money Road as dealmaking evaporates. This year has seen a sharp decline in investment banking revenues due to a slowdown in mergers and share offerings. This is a stark contrast to the explosive 2021, when bankers received significant pay raises.
NYSE: Goldman Sachs had 49,100 employees at the end of the third quarter, a significant increase from the pandemic’s initial hires. The source stated that it will maintain its pre-pandemic headcount. According to a filing, the workforce was 38,300 at the end of 2019.
A different source who is familiar with the situation stated that the bank is considering making a significant reduction to the annual bonus pool this year. According to sources with direct knowledge of the situation, Reuters reported in January that this contrasts with increases of forty percent to fifty percent for top-performing investment bankers in 2021.
Wells Fargo (NYSE:) banking analyst Mike Mayo wrote, “GS needs to show that its costs are as variable as its revenues, especially after a year when it provided special rewards to top managers during the boom times.”
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In a note, he stated, “Goldman Sachs now needs to show that it can do the same when business is not as good and that they live up to the old Wall Street adage that they eat what they kill.”
According to a source, the most recent plan would see hundreds of employees eliminated from Goldman’s consumer business.
In October, the bank made it clear that it was lowering its expectations for Marcus, its losing consumer unit. Goldman likewise plans to quit starting unstable purchaser credits, a source acquainted with the move told Reuters recently, another sign it is moving away from the business.
David Solomon, who took over as CEO in 2018, has worked with Marcus to expand the company’s operations. As part of a management reshuffle that also merged the trading and investment banking units, it was moved to the wealth business in October.
At the end of the third quarter, trading and investment banking—the traditional sources of Goldman’s profit—accounted for nearly 65% of the company’s revenue, up from 59% in the third quarter of 2018, when Solomon took over as CEO.
According to sources familiar with the situation, earlier on Friday, Semafor reported that Goldman Sachs will lay off up to 4,000 employees as the Wall Street bank struggles to meet profit targets.
The most recent work cut plans come after Goldman cut around 500 representatives in September, subsequent to stopping the yearly practice for quite some time during the pandemic, a source acquainted with the matter told Reuters at that point.
In July, the investment bank first warned that it might slow down hiring and cut costs.
Banks around the world, including Morgan Stanley (NYSE:) as well as Citigroup Inc. have reduced their workforces in recent months as a deal-making boom on Wall Street sputtered due to rising inflation, high interest rates, the conflict between Russia and Ukraine, and tensions between the United States and China.
