Leading global investment firm Goldman Sachs is preparing for more lay-offs in the next few weeks, after the company has slashed more than 3,000 positions over the last year.
The redundancies, according to the Wall Street Journal, could occur within the next few weeks and will also affect managing directors and senior executives.
It is CEO David Solomon’s attempts to cut costs as deal-making – the firm’s major revenue source – suffers a drought which has been exacerbated by a higher interest rate environment and fears of recession. He has begun slashing a workforce that ballooned following the pandemic.
The layoffs mark a third round of cuts in under a year, beginning with standard annual redundancies in September of a few hundred employees followed by the elimination of about 3,200 jobs in January across the firm’s New York, Hong Kong and London offices, which equates to 6 percent of its workforce.
Following the first quarter layoffs, the bank went from 49,000 employees to 45,000.
It is CEO David Solomon’s attempts to cut costs as deal-making – the firm’s major revenue source – suffers a drought which has been exacerbated by a higher interest rate environment and fears of recession. He has begun slashing a workforce that ballooned following the pandemic
The firings, according to the Wall Street Journal, could occur within the next few weeks and will also affect managing directors and senior executives
In January, the company posted its biggest earnings miss in more than a decade, as the company seeks to recover from the pandemic and a working-from-home and cost-of-living crisis.
The investment banking giant that month reported 2022 fourth-quarter net earnings of $1.33 billion, down 66 percent from last year, and 39 percent below what Wall Street analysts had expected.
‘Widely expected to be awful, Goldman Sachs’ Q4 results were even more miserable than anticipated,’ said Octavio Marenzi, CEO of consultancy Opimas.
‘The real problem lies in the fact that operating expenses shot up 11 percent, while revenues tumbled. This strongly suggests more cost-cutting and layoffs are going to come,’ he added at the time.
Goldman shares dropped more than 5 percent in morning trading in January
Goldman Sachs workforce ballooned to 49,100 last year. Even after the company sacked 3,200, it still had more employees than it did in 2021
Other Wall Street banks are also making deep cuts to their workforce and streamlining their operations amid the investment-banking deal drought.
Morgan Stanley is chopping roughly 3,000 employees this quarter, while, on its last earnings call, Bank of America said it planned to cut 4,000 positions – which is 2 percent of its workforce – by June.
Goldman’s investment banking fees fell 48 percent in the last quarter of 2022, while revenue from its asset and wealth management unit dropped 27 percent due to lower revenue from equity and debt investments.
It also reported a pre-tax loss of $778 million in its platform solutions unit, which houses transaction banking, credit card and financial technology businesses, including Apple Card and fintech lender GreenSky.
Full-year net loss for the platform solutions business was $1.67 billion, the bank said.
In the January layoffs, many Goldman employees were given little notice, and were cut loose without even receiving bonuses for their work in 2022, the Financial Times had reported.
The employees were reportedly axed via meetings and phone calls, with their office badges deactivated as they were escorted out of the buildings. The company will also mail personal items to the fired workers who were not in the office.
‘We know this is a difficult time for people leaving the firm,’ Goldman said in a statement. ‘We’re grateful for all our people´s contributions, and we’re providing support to ease their transitions.
‘Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.’
About a third of those fired at the time came from the investment banking and global markets division, and some of the sacked employees also relied on the job for their visas.
