By: Benyamin Davidsons
In the company’s traditional year end message to its employees, Goldman Sachs Group said it will be announcing more layoffs in the coming weeks.
As reported by Crain’s NY, Goldman’s Chief Executive Officer David Solomon said the investment bank will be cutting jobs this month to help the company cope with adverse economic conditions. “We are conducting a careful review and while discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January,” Solomon said. “There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity. For our leadership team, the focus is on preparing the firm to weather these headwinds.”
The banking giant may cut up to 8 percent of its workforce, which would amount to up to 4,000 jobs, though it could be much lower. The layoffs, which will likely impact each division of the bank, are part of a cost-cutting initiative in order to combat a drop in profit and revenue, people with knowledge of the matter told Crain’s. The company has not yet determined a final-cut number, rather top managers have been tasked with identifying potential cost-reduction strategies, said the sources who wished to remain anonymous.
“We need to proceed with caution and manage our resources wisely,” Solomon said in his message. A spokesperson for the New York-based company declined to comment.
The potential cuts are sharper than any other announced plan disclosed by any of the rival banks. Goldman is on track to announce roughly $48 billion annual revenue, marking its second-best performance, only behind last year’s record revenue. The company’s management, however, is struggling to meet profitability targets, due to high costs. Per Crain’s, analysts predict that the firm’s adjusted annual profit could plummet 44 percent. Goldman executives have also explained that the financial giant’s workforce has grown 34% since the end of 2018, boasting over 49,000 employees as of the third quarter of 2022.
Goldman was also the first major bank to foresee the problems and to cut jobs in September, though it was a modest cut which only impacted a few hundred employees. “Many firms will have to go back to the drawing board and right-size their organizations, it’s not just Goldman,” said Michael Karp, CEO of the Options Group, a global recruiting firm for financial services. “Firms over-hired, and now they will have to over-fire, too.”
Without a doubt, other investment banks are also struggling with revenue and profitability in the face of the looming recession and inflation. Wall Street is and has been in retrenchment mode, with firms strengthening their core and reducing excess. Last week, Morgan Stanley laid off about 1600 workers, CNBC reported. Credit Suisse GroupAG, Citigroup and Barclays Plc have all either announced layoffs or already terminated employees, and some smaller investment companies have even undertaken several rounds of layoffs. Similarly, the tech industry already announced hiring freezes and job cuts to help them get through what is predicted to be a tough year ahead.
