Job cuts at Goldman impacted investment banking and global markets

  • Mass repetition, spending review seduces the Wall Street giant
  • Discounts in all major divisions expected globally
  • Restructuring in the Asian wealth unit begins layoffs on Wednesday

New York / London / Hong Kong (Reuters) – Goldman Sachs (GS.N) The layoffs began on Wednesday in an all-out cost-cutting campaign, with about a third of those affected coming from its investment banking and global markets division, a source familiar with the matter said.

The Wall Street giant’s long-awaited job cuts are expected to mark the biggest staffing contraction since the financial crisis. This is likely to affect most of the bank’s major divisions, a source told Reuters this month, as its investment banking arm faces the deepest cuts.

The source, who was not named, said on Monday that more than 3,000 employees will be let go. On Wednesday, a separate source confirmed the start of the cuts.

“We know this is a difficult time for people leaving the company,” said a statement from Goldman Sachs on Wednesday.

“We are grateful for all of our employees’ contributions, and offer support to facilitate their transitions. Our focus now is on sizing the company appropriately for the opportunities that lie ahead in a challenging macroeconomic 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 laid off from various banks. Plus 3,000 from Goldman, Morgan Stanley (MS.N) A source said last month while HSBC had cut about 2% of its workforce, or 1,600 people. (HSBA.L) Sources said earlier that the disposal of at least 200.

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The past year has been challenging across groups including credit, equities and investment banking broadly, said Paul Sobera, president of Wall Street staffing consultancy Alliance. “Many did not make budgets.”

“It’s just part of Wall Street,” said Sorbera. “We are used to layoffs.”

The latest cuts will cut about 6% of Goldman’s headcount, which stood at 49,100 at the end of the third quarter.

The company’s employee count has added more than 10,000 jobs since the coronavirus pandemic as markets boom.

The cuts come as US banking giants are expected to report lower earnings this week. Goldman Sachs is expected to post a net profit of $2.16 billion in the fourth quarter, according to the median forecast of analysts at Refinitiv Eikon, down 45% from a net profit of $3.94 billion in the same period a year earlier.

Goldman Sachs shares have partially recovered from their 10% fall last year. The stock closed up 1.99% on Wednesday, up about 6% year-to-date.

LAYOFFS AROUND THE GLOBE

Goldman Sachs’ layoffs began in Asia on Wednesday, a source familiar with the matter said, as Goldman completed downsizing its wealth management business and shedding 16 private banking employees across its offices in Hong Kong, Singapore and China.

The source added that about eight employees were laid off in the research department of Goldman Bank in Hong Kong, with layoffs continuing in investment banks and other divisions.

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At the Goldman Center in central London, rain has reduced the potential for employee gatherings. Several security personnel actively patrolled the entrance to the building, but few people were entering or leaving the building. A glimpse of the bank’s recreational area behind the hotel lobby showed a group of staff in deep conversation but few signs of drama. The office’s local wine bars and restaurants also lacked an after-lunch trade, in stark contrast to the large-scale layoffs of the past when unlucky employees usually gathered to console each other and plan their next career moves.

In New York, employees are seen flocking to headquarters during the morning rush hour.

The Financial Times reported on Wednesday that Goldman’s redundancy plans will be followed by a broader spending review of corporate travel and expenses, as the US bank calculates the costs of a massive slowdown in corporate deal-making and declining capital markets activity since the war in Ukraine. .

The company is also cutting annual bonus payments this year to reflect the subdued market conditions, with payments expected to drop about 40%.

(Reporting by Sinead Cruz and Ian Withers in London, Selina Lee in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

Our standards: Thomson Reuters Trust Principles.

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