Following a cost-cutting review, Goldman will lay off approximately 3,200 employees this week
Goldman Sachs Group Inc. is plunging on one of its most significant job cuts as it seals in on a plan to terminate about 3,200 positions by this week, with the bank’s leadership going abysmal than rivals to drop jobs.
According to a person with information on the subject, the firm is anticipated to start the process mid-week, and the overall number of people affected will be, at most, 3,200. Indicating the broad nature of the cuts, more than a third of those will possibly be part of its core trading and banking units. In addition, the people said the firm is also confident to unmask financials tied to a new unit that contains its installment-lending and credit card business, which will record more than $2 billion in pretax losses, asking to remain unidentified as discussing private details.
A spokesperson declined to comment for the New York-based company. The cuts in its investment bank are upsurged by including the non-front-office roles added to divisional headcount in recent years. However, the bank plans to continue hiring, including recruiting the regular analyst class later this year.
Data shows headcount has jumped 34% since the end of 2018 under Chief Executive Officer David Solomon, climbing to more than 49,000 as of Sept. 30. During the pandemic, the firm’s decision to mostly set aside its annual cut of underperformers also affected the scale of firings this year.
Slowdowns in various businesses, a costly consumer-banking foray, and a doubtful view of markets and the economy are suggesting the bank to lower costs. Across Wall Street, merger activity and fees from expanding money for companies have taken a hit. A drop in asset values has eliminated another source of significant gains for Goldman from the previous year. Those broader industry movements have been complicated by the bank’s faults in its retail-banking foray, where losses accumulated faster than forecast throughout the year.
According to analyst estimates, that has left the bank facing a 46% plunge in profits, on about $48 billion of revenue. Still, that revenue mark has been boosted by its trading division that will post another rise this year, helping the firm-wide figure notch its second-best operation on record.
The final job cut figure is substantially lower than earlier proposals in management positions that could have removed nearly 4,000 jobs.
In 2008, the last significant performance of this scale came after the crash of Lehman Brothers. Then, Goldman planned to decrease more than 3,000 jobs or nearly 10% of its workforce, and top executives chose to give up their bonuses.
Sharing the Pain
The latest reductions represent an acknowledgment that even companies that performed better this year will have to take the pain for a firm-wide performance that will miss targets set for shareholders in a year of payment bleed.
Platform Solutions, the new unit where performance miss was particularly evident, whose numbers are prominent in the divisional breakdown. The more than $2 billion blow is amplified by lending-loss provisions, plagued by new accounting rules that force the company to claim more money as loan volumes rise and ballooning expenses.
Solomon told staff at year-end, “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 reductions also come a week before the bank’s traditional year-end stipend discussions. Especially within investment banking, compensation figures are expected to plunge even for those who remain at the firm.
It’s a sharp contrast from last year when staffers were flooded with big bonus increases, and a few selected were even granted special giveaways. Solomon’s $35 million compensation for 2021 placed him alongside Morgan Stanley’s James Gorman as the highest-paid CEO for a major U.S. bank.
- Published By Team Nation Press News