Thousands of jobs at Goldman Sachs will be eliminated as layoffs spread across Wall Street.

A person familiar with the matter has stated that Goldman Sachs Group Inc. aims to lay off thousands of employees in order to weather the present economic climate.

As dealmaking slows on Wall Street, layoffs are just the latest sign of trouble. Revenues from investment banking have decreased this year due to a decrease in mergers and stock offerings following a record-breaking 2021 when bankers received large wage hikes.

Goldman Sachs completed the third quarter with 49,100 employees after hiring extensively throughout the pandemic. There will still be more workers than there were before the outbreak, the source said. It was reported that, towards the end of 2019, the labor force had increased by 38,300 individuals.

According to another source familiar with the matter, the bank is thinking of significantly cutting the annual bonus pool this year. A Reuters article from earlier this year reported anonymous sources claiming that the highest-performing investment bankers could see pay hikes of 40–50% in 2021.

According to Mike Mayo, a banking analyst at Wells Fargo, “GS needs to show that its costs are as variable as its revenues, especially following a year in which it gave extra rewards to top management during the boom times.”

“Goldman Sachs now needs to show that it can do the same when business is not as good and that they live up to the old Wall Street cliché that they eat what they kill,” writes the author.

Client banks are having a tough time of it.

A source claims that the current strategy will result in hundreds of layoffs within Goldman’s consumer division.

In October, clues emerged that the bank was lowering its sights on Marcus, its loss-making consumer sector. Goldman plans to halt the origination of unsecured consumer loans, according to reporting from Reuters earlier this week.

Since David Solomon took over as CEO of Marcus in 2018, he has worked to increase the company’s reach. It was shifted under the wealth business as part of a management overhaul that included the trading and investment banking departments in October.

During the third quarter of 2018, when Solomon took over as CEO, trading and investment banking accounted for over 65% of Goldman’s revenue.

Goldman is struggling to meet earnings predictions, and Semafor reported earlier on Friday that the Wall Street firm will let off as many as 4,000 staff.

Unfortunately, no one from Goldman Sachs could be reached for a response.

Reuters reported in October, citing a source with knowledge of the situation, that Goldman had planned to lay off 500 more workers, a move that had been delayed for two years owing to the pandemic.

The investment bank first raised concerns about a possible decrease in hiring and budget cutting in July.

Wall Street’s dealmaking boom has collapsed due to high interest rates, tensions between the United States and China, the war between Russia and Ukraine, and surging inflation, leading to layoffs at many big global banks such as Morgan Stanley and Citigroup Inc.

Author: uparbox

Leave a Reply

Your email address will not be published. Required fields are marked *