Pedro Goncalves
·Finance Reporter, Yahoo Finance UK
Mon, January 9, 2023
Goldman Sachs prepares for tough economic conditions, including recessions in many key markets. Photo: Andrew Kelly/Reuters
Goldman Sachs (GS) is planning to cut approximately 3,200 jobs, one of the largest rounds of layoffs in the company's history.
The layoffs are likely to affect most major divisions of the banks but should focus on Goldman Sachs' investment banking division, according to Bloomberg.
The bank is expected to begin informing people that they will lose their jobs on Wednesday.
Goldman Sachs will cut around 6.5% of roles from its workforce of 49,000 as it prepares for tough economic conditions, including recessions in many key markets. Headcount has jumped 34% since the end of 2018.
The firm is also expected to cut hundreds of jobs from its loss-making consumer operation after scaling back its direct-to-consumer Marcus division.
The investment bank has six offices in the UK, including in London, where it is believed to employ around 6,000 staff, and in Birmingham and Milton Keynes.
However, Goldman Sachs is continuing to hire in areas such as its analyst class for junior employees.
Chief executive, David Solomon, told staff late last month that the cuts were necessary to “weather the headwinds” caused by rising interest rates.
In December, the Financial Times reported that Goldman Sachs was considering cutting its bonus pool for investment bankers by at least 40% this year as it seeks to keep control of costs.
Institutional banks have been struck by a major slowdown in activity in recent months due to volatility in the global financial markets.
Annual bonuses season is due to kick off this week as JP Morgan (JPM), Citi (C) and Bank of America (BAC) all report their results for the past year.
The drop-off in deal activity is expected to result in a marked fall in bonus payments.
Goldman Sachs is expected to unveil pre-tax losses of more than $2bn (£1.7bn/€187bn) for a new unit covering its credit card and instalment-lending business.
The bank is scheduled to report fourth-quarter earnings on 17 January.
Goldman Sachs readies biggest layoffs since the financial crisis
The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City
Sun, January 8, 2023
By Saeed Azhar and Scott Murdoch
(Reuters) -Goldman Sachs Group will start cutting thousands of jobs across the firm from Wednesday, two sources familiar with the move said, as it prepares for a tough economic environment.
Just over 3,000 employees will be let go, one of the sources said, but the final number is yet to be determined. That scale of layoffs would be the largest since the 2008 financial crisis, one of the sources said.
The sources could not be named as the information was not yet disclosed publicly. Goldman Sachs declined to comment.
Bloomberg News reported on Sunday that Goldman would eliminate about 3,200 positions.
Goldman had 49,100 employees at the end of the third quarter, after adding significant numbers of staff during the coronavirus pandemic.
The layoffs are likely to affect most of the bank's major divisions, but should centre on Goldman Sachs' investment banking arm, one of the sources said. Wall Street banks have suffered a major slowdown in corporate dealmaking activity as a result of volatile global financial markets.
Hundreds of jobs are also likely to be reduced from Goldman Sachs' consumer business, Marcus, after it scaled back plans for the loss-making unit, the sources said.
The bank's chief executive David Solomon sent a year-end voice memo to staff warning of a headcount reduction in the first half of January, two separate sources said. Goldman Sachs declined comment on the memo.
The job cuts come ahead of the bank's annual bonus payments which are usually delivered later in January and are expected to fall about 40%.
The bank restarted its annual performance review process and staff cuts in September after pausing for two years during the pandemic.
The Wall Street giant typically trims about 1% to 5% of employees each year. These new cuts will come on top of the earlier layoffs.
Global banks, including Morgan Stanley and Citigroup Inc, have reduced their workforces in recent months as a dealmaking boom on Wall Street fizzled out due to high interest rates, tensions between the United States and China, the war between Russia and Ukraine, and soaring inflation.
Global investment banking fees nearly halved in 2022, with $77 billion earned by the banks, down from $132.3 billion one year earlier, Dealogic data showed.
The total value of mergers and acquisitions (M&A) globally had slumped 37% to $3.66 trillion by Dec. 20, according to Dealogic data, after hitting an all-time high of $5.9 trillion last year.
Banks had executed $517 billion worth of equity capital markets (ECM) transactions by late December 2022, the lowest level since the early 2000s and a 66% drop from 2021's bonanza, according to Dealogic data.
Despite the slowdown, Goldman's top dealmakers told Reuters in recent interviews that they are bullish on an M&A recovery in the second half of 2023.
(Reporting by Saeed Azhar in New York and Scott Murdoch in Sydney; Editing by Kenneth Maxwell, Christopher Cushing and Nick Zieminski)
The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City
Sun, January 8, 2023
By Saeed Azhar and Scott Murdoch
(Reuters) -Goldman Sachs Group will start cutting thousands of jobs across the firm from Wednesday, two sources familiar with the move said, as it prepares for a tough economic environment.
Just over 3,000 employees will be let go, one of the sources said, but the final number is yet to be determined. That scale of layoffs would be the largest since the 2008 financial crisis, one of the sources said.
The sources could not be named as the information was not yet disclosed publicly. Goldman Sachs declined to comment.
Bloomberg News reported on Sunday that Goldman would eliminate about 3,200 positions.
Goldman had 49,100 employees at the end of the third quarter, after adding significant numbers of staff during the coronavirus pandemic.
The layoffs are likely to affect most of the bank's major divisions, but should centre on Goldman Sachs' investment banking arm, one of the sources said. Wall Street banks have suffered a major slowdown in corporate dealmaking activity as a result of volatile global financial markets.
Hundreds of jobs are also likely to be reduced from Goldman Sachs' consumer business, Marcus, after it scaled back plans for the loss-making unit, the sources said.
The bank's chief executive David Solomon sent a year-end voice memo to staff warning of a headcount reduction in the first half of January, two separate sources said. Goldman Sachs declined comment on the memo.
The job cuts come ahead of the bank's annual bonus payments which are usually delivered later in January and are expected to fall about 40%.
The bank restarted its annual performance review process and staff cuts in September after pausing for two years during the pandemic.
The Wall Street giant typically trims about 1% to 5% of employees each year. These new cuts will come on top of the earlier layoffs.
Global banks, including Morgan Stanley and Citigroup Inc, have reduced their workforces in recent months as a dealmaking boom on Wall Street fizzled out due to high interest rates, tensions between the United States and China, the war between Russia and Ukraine, and soaring inflation.
Global investment banking fees nearly halved in 2022, with $77 billion earned by the banks, down from $132.3 billion one year earlier, Dealogic data showed.
The total value of mergers and acquisitions (M&A) globally had slumped 37% to $3.66 trillion by Dec. 20, according to Dealogic data, after hitting an all-time high of $5.9 trillion last year.
Banks had executed $517 billion worth of equity capital markets (ECM) transactions by late December 2022, the lowest level since the early 2000s and a 66% drop from 2021's bonanza, according to Dealogic data.
Despite the slowdown, Goldman's top dealmakers told Reuters in recent interviews that they are bullish on an M&A recovery in the second half of 2023.
(Reporting by Saeed Azhar in New York and Scott Murdoch in Sydney; Editing by Kenneth Maxwell, Christopher Cushing and Nick Zieminski)
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