Goldman Sachs Group is preparing to embark on one of the most extensive layoffs of its workers beginning this month. This move is the biggest ever since the start of the pandemic.
The Wall Street Giant is planning to discard hundreds of job roles and lay off people that can start next week, according to people knowing the new development.
Though the total number of job cuts is less than the previous rounds, the layoffs are mainly on the assumption of annual culling followed by Goldman, which had paused during the lockdown of the pandemic.
A slump in earnings after record-breaking performance over the years has resulted in the move. Goldman Sachs is considered the banking bellwether, and the move on its part is a sure sign of the chill set for the industry.
According to Bloomberg Data, banks are expected to post a more than 40% decline in revenue this year. The New York-based Goldman had earlier in July said it plans to slow hiring and reintroduce the annual performance reviews putting the jobs cuts it had planned to exercise later this year on the back burner. The efforts by the firm are to cut costs in a challenging environment.
The annual performance review is done to weed out the nonperformers. Denis Coleman, the Chief Financial Officer, had said at that time that they could reduce the pacing of replacement hiring after losing employees due to attrition. At the end of Quarter 2 in 2022, Goldman Sachs’s employee strength stood at 47,000, up from 41,000 a year ago.
Bloomberg News and New York Times reported that Goldman’s jobs cuts were on the cards on Monday. A spokeswoman at Goldman declined to comment on the matter.
Lower Investment Banking Deals
Goldman Sachs suffered along with its competitors on Wall Street. The industrywide slump due to low initial public offerings and mergers affected its bottom line in 2022. A slowdown in investment banking activities due to market volatility that boosted trading gains weigh on asset management and capital markets.
After a record-breaking 2021, Goldman investment banking revenue fell 41 % for the second quarter in 2022 compared to the same period in 2021, this showed a steep decline in underwriting activities even as the company posted a 32 % gain in trading operations. During the same period, profit fell by nearly 50% compared to 2021.
The second quarter saw Goldman reducing its operating expenses compared to the previous years. This was mainly because of lower compensation and employee benefits. The company, however, reported higher costs in the growth initiative areas.
Shares of Goldman Sachs are down 10% and more this year and 15% approximately compared to last year. This is higher when compared with a 7.5% drop in the S&P Financial Index in the previous year.
