- Mass layoffs, spending review beckons Wall Street giant
- Cutbacks expected in all major businesses globally
- Restructuring at the Asian wealth unit will usher in layoffs on Wednesday
NEW YORK/LONDON/HONG KONG, Jan. 12 (Portal) – Goldman Sachs (GS.N) on Wednesday began laying off employees as part of a sweeping cost-cutting campaign, with about a third of those affected coming from investment banking and global markets, a said source familiar with the matter.
The long-awaited job cuts at the Wall Street titan are likely to represent the biggest job cuts since the financial crisis. It will likely affect most of the bank’s major businesses, with investment banking facing the deepest cuts, a source told Portal this month.
Just over 3,000 employees would be laid off, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had begun.
“We know this is a difficult time for people leaving the company,” Goldman Sachs said in a statement Wednesday.
“We are grateful for the contributions of all our employees and offer support to ease their transitions. Our focus now is to properly size the business for the opportunities ahead in a challenging macro environment.”
The cuts are part of broader cuts across the banking industry as a possible global recession looms. At least 5,000 people are in the process of being banned from various banks. In addition to Goldman’s 3,000, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 employees, a source said last month, while HSBC (HSBA.L) has cut at least 200 jobs, sources previously said.
The past year has been challenging for all groups, including credit, equity and investment banking in general, said Paul Sorbera, president of Wall Street executive search firm Alliance Consulting. “Many didn’t make a budget.”
“It’s just part of Wall Street,” Sorbera said. “We’re used to layoffs.”
The latest cuts will reduce about 6% of Goldman’s workforce, which stood at 49,100 at the end of the third quarter.
[1/3] A trader works at the Goldman Sachs booth on the floor of the New York Stock Exchange, April 16, 2012. Portal/Brendan McDermid/File Photo
The company’s workforce had added more than 10,000 jobs since the coronavirus pandemic when markets were booming.
The cuts come as US banking giants are expected to report lower earnings this week. According to an average forecast by analysts at Refinitiv Eikon, Goldman Sachs is expected to report net income of $2.16 billion in the fourth quarter, down 45% from net income of $3.94 billion in the same period last year.
Goldman Sachs stock has partially recovered from a 10% decline over the past year. The stock closed up 1.99% on Wednesday, up about 6% year-to-date.
REDUNDANCES AROUND THE WORLD
Goldman’s layoffs began Wednesday in Asia, where Goldman completed the downsizing of its private wealth management business and laid off 16 private banking employees at its offices in Hong Kong, Singapore and China, a source familiar with the matter said.
About eight employees have also been laid off at Goldman’s research department in Hong Kong, the source added, with layoffs in investment banking and other departments afoot.
Rainfall reduced the prospect of staff gatherings at Goldman’s central London hub. Several security guards were actively patrolling the entrance to the building, but few people entered or exited the property. A peek into the bank’s leisure area just beyond the lobby showed a handful of employees in deep conversation, but few signs of drama. Wine bars and restaurants near the office also had little after-lunch trading, in stark contrast to the large-scale layoffs of the past when unhappy employees typically gathered to comfort each other and plan their next career moves.
In New York, employees were seen pouring into the headquarters during the morning rush.
Goldman’s layoff plans will be followed by a broader review of business travel and spending, the Financial Times reported on Wednesday, as the U.S. bank calculates the cost of a massive slowdown in corporate deals and a slump in capital markets activity since the war in Ukraine.
The company is also trimming its annual bonus payments this year to reflect weak market conditions, with payouts expected to fall about 40%.
Reporting from Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Edited by Josie Kao and Christopher Cushing
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