Reduction of staff at Goldman Sachs will have bad impact on global markets
2023.01.11 14:51
Reduction of staff at Goldman Sachs will have bad impact on global markets
By Tiffany Smith
Budrigannews.com – According to a person who is familiar with the situation, Goldman Sachs began laying off employees on Wednesday as part of a massive effort to cut costs. About a third of those affected work in the investment banking and global markets divisions, according to the source.
It is anticipated that the Wall Street titan’s long-awaited layoff will result in the largest reduction in employee numbers since the financial crisis. According to a source who spoke with Reuters earlier this month, it is likely to have an impact on the majority of the major divisions of the bank, with the investment banking division facing the most severe reductions.
The unnamed source said on Monday that just over 3,000 employees will be let go. Wednesday, a different source confirmed that cuts had begun.
As a possible global recession approaches, the reductions are a part of broader reductions throughout the banking sector. A minimum of 5,000 people are currently being removed from various banks. Along with Goldman’s 3,000, Morgan Stanley (NYSE:) HSBC is shedding at least 200 employees, according to previous sources, while has cut about 2% of its workforce, or 1,600 people, according to a source last month.
Paul Sorbera, president of the Wall Street recruitment firm Alliance Consulting, stated, “The past year was challenging across groups including credit, equities, and investment banking generally.” Many did not adhere to budgets.”
Sorbera stated, “It’s just a part of Wall Street.” We are accustomed to seeing job cuts.”
The number of employees at Goldman Sachs, which stood at 49,100 at the end of the third quarter, will be reduced by approximately 6% as a result of the most recent reductions.
Since the coronavirus pandemic, the company’s workforce had grown by more than 10,000 as markets boomed.
The cuts come at a time when major banks in the United States are expected to report lower profits this week. NYSE: Goldman Sachs is expected to report a net profit of $2.16 billion in the fourth quarter, down 45 percent from a net profit of $3.94 billion in the same period a year earlier, according to analysts’ mean forecasts on Refinitiv Eikon.
Goldman Sachs shares have partially recovered from a 10% decline in the previous year. In afternoon trading, the stock was up 2%, or about 6% so far this year.
According to a person with knowledge of the situation, Goldman began cutting back on its private wealth management business on Wednesday and laid off 16 private banking employees from its offices in Hong Kong, Singapore, and China.
The source added that eight employees were also fired from Goldman Sachs’ research department in Hong Kong. Other divisions, including investment banking, are also experiencing staff cuts.
Rainfall reduced the likelihood of staff huddles at Goldman Sachs’ central London hub. The building’s entrance was actively guarded by several security guards, but few people were entering or exiting the property.
A few bank employees were engaged in deep conversation, but there were no signs of drama when one looked into the bank’s recreation area, which was just beyond the lobby. In stark contrast to large-scale layoffs in the past, when unlucky employees typically gathered to console one another and plan their next career moves, local wine bars and restaurants also lacked post-lunch business.
During the morning rush in New York, employees were observed rushing into headquarters.
The Financial Times reported on Wednesday that Goldman’s plans for layoffs will be followed by a more comprehensive spending review of corporate travel and expenses. The U.S. bank is counting the costs of a massive slowdown in corporate dealmaking and a decline in capital markets activity since the war in Ukraine.
Due to the weakening market, the business is also reducing its annual bonus payments this year by approximately 40%.
