Goldman Sachs Group is planning a fresh round of job cuts that will be unveiled in a matter of weeks, according to a Bloomberg report quoting Chief Executive Officer David Solomon’s traditional year-end message to staff.
“We are conducting a careful review and while discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January… There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity. For our leadership team, the focus is on preparing the firm to weather these headwinds,” Solomon said in the message, according to the report.
Goldman Sachs may lay off as much as 8 per cent of its workforce or up to 4,000 jobs, to contain a slump in profit and revenue, people with knowledge of the matter said earlier this month, according to the report.
The company had 49,100 employees at the end of the third quarter after adding significant numbers of staff during the pandemic. Its headcount will remain above pre-pandemic levels, the source said. The workforce stood at 38,300 at the end of 2019, according to a filing.
“We need to proceed with caution and manage our resources wisely,” Solomon said in his message.
According to reports earlier, the bank is also weighing a sharp cut to the annual bonus pool this year. That contrasts with increases of 40-50 per cent for top-performing investment bankers in 2021.
The bank has also signaled to scale back its ambitions for Marcus, the loss-making consumer unit, in October. Goldman also plans to stop originating unsecured consumer loans, according to reports earlier.
Trading and investment banking — the traditional drivers of Goldman’s profit — accounted for nearly 65 per cent of its revenue at the end of the third quarter, compared with 59 per cent in the third quarter of 2018, when Solomon took the top job.
In July, the investment bank had warned it might slow hiring and cut expenses as the economic outlook worsens. It reported a 48 per cent slump in quarterly profit, which beat forecasts due to gains in fixed-income and commodities trading.
Goldman’s profit decline came almost entirely from the global economic uncertainty and the slowdown in deal-making happening at most banks. Investment banking revenues were down 41 per cent from a year ago, as fees from taking companies public and helping them issue fresh debt nearly evaporated in the quarter.
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