Goldman Sachs Group is cutting as many as 3,000 jobs as it assesses that the economic conditions are tightening. The layoffs will start across the company from Wednesday, media reports said.
As of now, the investment banking giant has nearly 50,000 employees. The bank had added several thousands of employees during the pandemic when deals and acquisitions boomed.
The layoffs will affect employees across the spectrum but most job eliminations will be in the investment banking division. Another division that will bleed is the bank's loss-making consumer business where hundreds of jobs will be eliminated.
8% of Global Workforce
Two weeks ago, Goldman Sachs CEO confirmed that the bank will be laying off as many as 4,000 people starting January. Chief executive David Solomon had reportedly told the staff about the job cuts some ten days after media reports hinted at the incoming job trimming.
According to reports at that time, the job cuts would affect about 8 percent of its global staff. The bank had come around to cutting thousands of jobs as revenues have taken a hit following the drying up of deal making in the post-pandemic months.
Apart from cutting 4,000 jobs, the bank is also considering cuts to its bonus pool of up to 40 per cent. "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," the CEO said.
In September last year, Goldman Sachs had cut about 500 employees. The move had come after the investment bank reported a 48 percent plunge in its second quarter profit. Its investment banking revenue was $2.1 billion, a drop of 41 percent. "There is no question that the market environment has gotten more complicated and a combination of macroeconomic conditions and geopolitics is having a material impact on asset prices, market activity and confidence," CEO Solomon said at that time.
According to analysts surveyed by S&P Global Market Intelligence, Goldman will make $12 billion in net profits for 2022, and $13 billion in 2023. However, investment banking fees dropped by about 50 percent. The bank earned only $77 billion globally in investment banking fees globally in 2022, as against $132.3 billion a year ago.