NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs ( GS.N ) began cutting staff on Wednesday as part of a cost-cutting drive, with about a third of those affected coming from investment banking and global markets. department, a source familiar with the matter said.
The long-awaited job cuts at the Wall Street titan are expected to represent the biggest reduction in headcount since the financial crisis. It will affect most of the bank’s core divisions, with its investment banking arm facing the deepest cuts, a source told Reuters this month.
More than 3,000 workers will be laid off, an unnamed source said on Monday. A separate source confirmed the layoffs had begun on Wednesday.
“We know this is a difficult time for people leaving the firm,” Goldman Sachs said in a statement on Wednesday.
“We are grateful for all the contributions our people have made and are supporting them to ease their transition. Our focus now is to right-size the firm for the opportunities that lie ahead in a challenging macroeconomic environment.”
The layoffs are part of wider 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. In addition to 3,000 from Goldman, Morgan Stanley ( MS.N ) cut about 2% of its workforce, or 1,600 people, while HSBC ( HSBA.L ) cut at least 200 jobs, a source said last month.
Paul Sorbera, president of the Wall Street recruiting firm Alliance Consulting, has had a rough past year among groups including credit, equities and investment banking. “Many didn’t budget.”
“It’s just part of Wall Street,” Sorbera said. “We are used to seeing cuts.”
The latest layoffs will cut about 6% of Goldman’s workforce, which stood at 49,100 at the end of the third quarter.
[1/3] A trader works on the floor of the New York Stock Exchange at Goldman Sachs, April 16, 2012. REUTERS/Brendan McDermid/File Photo
The firm’s workforce has added more than 10,000 jobs since the coronavirus pandemic as markets rallied.
The declines come as US banking giants are expected to report lower profits this week. Goldman Sachs is expected to report net profit of $2.16 billion in the fourth quarter, down 45% from net profit of $3.94 billion in the same period a year ago, according to the average forecast of Refinitiv Eikon analysts.
Shares of Goldman Sachs have partially recovered after falling 10% last year. Shares rose 1.99% on Wednesday, up nearly 6% year-to-date.
LAYOFFS AROUND THE WORLD
Goldman’s layoffs began Wednesday in Asia, where Goldman spun off its private wealth management business and let go 16 private bankers in its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.
Goldman’s research department in Hong Kong also cut about eight jobs, the source added, while layoffs continued in investment banking and other divisions.
Rain in Goldman’s central London hub has reduced the likelihood of a staff rally. Several security guards actively patrolled the entrance to the building, but very few people entered or left the property. A look around the lounge area outside the bank’s lobby revealed several employees deep in conversation but few signs of drama. The office’s local wine bars and eateries were also devoid of after-dinner trade, unlike the large-scale layoffs of the past, where downtrodden employees typically gather to console each other and plan their next career move.
In New York, workers flocked to headquarters during the morning rush hour.
Goldman’s cut plans will be followed by a broader spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the US bank calculates the cost of a massive slowdown in corporate deals and a slowdown in capital markets activity following the war in Ukraine. .
The company is also cutting annual bonus payouts this year to reflect depressed market conditions, with payouts expected to fall by about 40%.
Reporting by Sinead Cruise and Iain Withers in London, Selena Lee in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Edited by Josie Kao and Christopher Cushing
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