Goldman Sachs is cutting thousands of jobs as revenues have taken a hit following the drying up of deal making in the post-pandemic months. Multiple media reports said the investment bank is likely to cut as much as 8 percent of its global workforce.
The layoff will affect more than 4,000 people. Goldman Sachs had nearly 50,000 employees as of the end of the third quarter. Sources said even after cutting thousands of jobs, the bank will have more than its pre-pandemic staff strength, according to Reuters. According to a filing, the workforce stood at 38,300 at the end of 2019. .
The bank is still finalising the details of the layoff and officials did not comment on the development. Goldman chief executive David Solomon has been open about the economic headwinds the bank took on. He has said that he was forced by the slide in business environment to look for avenues of cost cutting.
"We continue to see headwinds on our expense lines, particularly in the near term ...We've set in motion certain expense mitigation plans, but it will take some time to realise the benefits. Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set," Solomon said last week, according to BBC.
Goldman Sachs had cut about 500 employees in September. The move had come after Goldman Sachs 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," Goldman Sachs Chief Executive David Solomon told BBC.
Other global banks like Morgan Stanley and Citigroup have also resorted to layoffs as economic conditions turned negative.
"GS needs to show that its costs are as variable as its revenues, especially after a year when it provided special rewards to top managers during the boom times ... Goldman Sachs now needs to show that it can do the same when business is not as good and that they live up to the old Wall St. adage that they 'eat what they kill,'" Mike Mayo, a banking analyst at Wells Fargo, said, according to Reuters.