Goldman Sachs is preparing for a downsizing in the coming weeks, Chief Executive David Solomon said in a note to employees, as the bank seeks to reverse a recent expansion trajectory and scale back its consumer finance ambitions.
“While discussions are ongoing, we anticipate our downsizing will take place in the first half of January,” Solomon said in a year-end voicemail message sent to many of the group’s 49,000 employees.
“There are a variety of factors affecting the business landscape, including tightening monetary conditions slowing economic activity,” he added. “For our leadership team, the focus is on preparing the company to weather these headwinds.”
Goldman declined to comment.
The group has considered laying off up to 8 percent of its staff, people familiar with its plan said earlier this month. Investment bankers surviving the cuts could face bonus cuts of 40 percent or more, the people added.
Solomon’s dismal year-end report, first reported by Bloomberg, underscores how far the bank’s fortunes have fallen in the year since he presented record 2021 results to shareholders and staff enjoyed blockbuster bonuses.
Goldman’s investment bank has since plummeted profits, begun to reverse a costly foray into retail banking and faced a series of damaging allegations about the treatment of female employees.
Despite Solomon’s efforts to build businesses with steady revenues, Goldman is still heavily dependent on volatile earnings from its investment banking and trading businesses, which investors don’t value much.
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Analyst forecasts suggest Goldman’s revenue and earnings have fallen faster this year than those of JPMorgan Chase, Morgan Stanley, Bank of America and other more diversified peers.
A bloodshed in January would allow Solomon to unveil a leaner cost structure when he hosts the bank’s investor day in February.
The event — only the second of its kind in Goldman’s 23-year tenure as a public company — will be Solomon’s chance to convince investors that a restructuring undertaken in October put the bank on track to meet 2023 profit targets , while many believe that this will be the case will be a recession.