Goldman Sachs Group Inc plans to cut thousands of jobs to cope with a tough economic environment, a source familiar with the matter said.
The layoffs are the latest sign that job cuts are accelerating as Wall Street closes. Investment banking earnings have fallen this year due to a slowdown in mergers and IPOs, marking a sharp reversal from the boom in 2021 when bankers received big salaries.
Goldman Sachs had 9,100 employees at the end of the third quarter after a significant increase in the number during the pandemic. The source said its staffing levels are above pre-pandemic levels. According to the announcement, the workforce stood at 38,300 at the end of 2019.
The number of employees affected by the layoffs is still being discussed and details are expected to be known early next year, the source said.
The bank is considering a sharp cut in its annual bonus fund this year, said a separate source familiar with the matter.
The contrasts with a 0-50 percent increase for top investment bankers in 2021, Reuters reported in January, citing people with direct knowledge of the matter.
“GS needs to show that its costs are as volatile as its revenues, especially after a year in which it offered special bonuses to top executives during the boom,” Wells Fargo banking analyst Mike Mayo wrote.
“Goldman Sachs must now show that it can do the same when business is not so good and that they live by the old Wall St. adage that they ‘eat what they kill,'” he said in a note.
The company’s shares fell 1.3%, along with shares of JPMorgan and Chase Co ( JPM.N ) and Morgan Stanley ( MS.N ), which fell 0.6% and 1.3%, respectively.
Goldman shares are down nearly 10% this year. But they outperformed the broader S&P 500 Bank Index (.SPXBK), which is down 24% year to date.
CONSUMER BANK TRIGGLES
The latest plan involves laying off hundreds of employees in Goldman’s consumer business, said source.
The bank said in October that it was lowering its targets for loss-making consumer Marcus. Goldman also plans to stop issuing unsecured consumer loans, a source familiar with the business told Reuters earlier this week, another sign the company is exiting the business.
CEO David Solomon, who took office in 2018, tried to diversify the company’s activities with Marcus. In October, it was handed over to the wealth business as part of a management shake-up that also combined the merchant and investment banking units.
Trading and investment banking — Goldman’s traditional profit drivers — accounted for nearly 65 percent of its revenue at the end of the third quarter, compared with 59 percent in the third quarter of 2018, when Salomon took over.
Semafor reported earlier on Friday that Goldman is laying off up to 4,000 people, according to people familiar with the matter, as the bank struggles to meet profit targets,Goldman Sachs declined to comment.
he latest plans come after Goldman laid off about 500 employees in September after suspending the annual practice for two years during the pandemic, a source familiar with the matter told Reuters at the time.
Source:Reuters
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