Summary
- Mass redundancies, spending review beckon for Wall Street titan
- Reductions to all major divisions expected, worldwide
- Restructuring in Asian wealth unit kicks off Wednesday’s layoffs
Goldman Sachs (GS.N) began cutting jobs on Wednesday in an extensive cost-cutting drive, with around a third of those affected coming from the global markets and investment banking division, a source with knowledge of the matter said.
The long-expected layoffs at the Wall Street giant are expected to represent the largest contraction in headcount since the financial crisis. It is likely to affect almost all of the bank’s major divisions, with its investment banking arm facing the biggest cuts, a source told Reuters in January.
Just over 3,000 people will be fired, the source, who could not be named, said on Monday. A different source confirmed on Wednesday that layoffs had started.
“We know this is a difficult time for people leaving the firm,” a Goldman Sachs statement on Wednesday said.
“We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.”
The cuts are part of broader reductions across the banking industry as a potential global recession approaches. At least 5,000 employees are in the process of being laid off from several banks. In addition to the 3,000 from Goldman, Morgan Stanley (MS.N) has slashed about 2% of its headcount, or 1,600 people, a source said in December while HSBC (HSBA.L) is letting go at least 200, sources previously said.
Last year was tough across groups including equities, credit, and investment banking broadly, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many didn’t make budgets.”
“It’s just part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”
The most recent cuts will reduce about 6% of Goldman’s workforce, which hit 49,100 at the end of the third quarter.
The lender’s headcount had added more than 10,000 jobs since the Covid-19 pandemic as markets boomed.
The job cuts come as U.S. banking giants are forecast to post lower profits this week. Goldman Sachs is expected to post a net profit of $2.16 billion in the fourth quarter, according to a mean forecast by analysts on Refinitiv Eikon, a fall of 45% from $3.94 billion net profit in the same period of the previous year.
Shares of Goldman Sachs have partially recouped from a 10% fall in 2022. The stock ended Wednesday with a 1.99% rise, up around 6% year-to-date.
Layoffs Around The World
Goldman’s layoffs started in Asia on Wednesday, where Goldman completed cutting back its private wealth management business and firing 16 private banking staff across its Hong Kong, China, and Singapore offices, a source familiar with the matter said.
About eight staff were also axed in Goldman’s research department in Hong Kong, the source added, with layoffs continuing in the investment banking and other divisions.
At Goldman’s central London hub, rainfall reduced the possibility of staff huddles. Several security personnel actively guarded the building’s entrance, but a handful of people were entering or leaving the property.
A glimpse into the bank’s recreational area just past its lobby showed a few staffers in deep conversation but little sign of drama. Eateries and wine bars local to the office were also short of post-lunch trade, in stark comparison to large-scale layoffs of the past when unlucky employees would typically gather to comfort each other and plan their next career moves.
In New York, workers were seen going into headquarters during the morning rush.
Goldman’s redundancy plans will be accompanied by a comprehensive spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the U.S. bank computes the costs of a massive downturn in corporate dealmaking and a fall in capital markets activity since Russia invaded Ukraine.
The company is also slashing its annual bonus payments in 2023 to point to depressed market conditions, with payouts expected to drop about 40%.
