New York: Goldman Sachs Group Inc is embarking on one of its biggest rounds of job cuts as it locks down on plans to eliminate around 3,200 positions this week, leading the bank to go deeper into shedding jobs than rivals. Is.
According to a person with knowledge of the matter, the firm expects to start the process in the middle of the week and the total number of people affected will not exceed 3,200. More than a third of those will likely be within its core trading and banking units, reflecting the broad nature of the cuts. The firm is also set to unveil financials linked to a new entity, including its credit card and installment-lending business, that will record more than $2 billion in pretax losses, the people said, discussing private information. Told not to.
A spokeswoman for the New York-based company declined to comment. Cuts at its investment bank have been compounded by the addition of non-front-office roles added to the divisional headcount in recent years. The bank still plans to continue recruiting, including inducting the regular analyst cadre later this year.
under the chief executive officer David SolomonThe data shows that the number of employees has increased by 34% since the end of 2018, reaching more than 49,000 as of 30 September. The scale of firings this year has also been hit by the firm’s decision to set aside its annual cuts of underperformers during the pandemic.
Slowdowns in various business sectors, a costly consumer-banking foray, and an uncertain outlook for the markets and the economy are prompting the bank to reduce costs. Merger activity and fees from companies raising money have rattled Wall Street, and plunging asset prices have eliminated another source of big gains. goldman From just one year ago. Those broader industry trends have been compounded by the bank’s missteps in its retail-banking forum, where losses grew at a much faster rate than forecast during the year.
The bank faced a 46% drop in profits on revenue of about $48 billion, according to analyst estimates. Still, that revenue mark has been bolstered by its trading division which will post another jump this year, helping the firm’s figure post its second-best performance on record.
The final job cut figure is significantly lower than earlier proposals in the management ranks that could have eliminated around 4,000 jobs.
The last major exercise of this scale came after the collapse of Lehman Brothers in 2008. Goldman at the time launched a plan to cut more than 3,000 jobs, or about 10% of its workforce, and top executives elected to forgo their bonuses.
sharing the pain
The latest cuts represent an acknowledgment that even better-performing businesses this year will take pains for firm-wide performance, which in a year of spending bloodshed is going to miss targets set for shareholders. Used to be.
That performance slippage was especially evident in the new unit called Platform Solutions, whose numbers stand out in the divisional breakdown. There’s more than $2 billion in losses made up by loan-loss provisions, which are amplified by new accounting rules that force firms to set aside more money as debt volumes rise, as well as ballooning expenses. it happens.
“There are a number of factors affecting the business outlook, including tightening monetary conditions slowing economic activity,” Solomon told employees at the end of the year. “For our leadership team, the focus is on preparing the firm to deal with these headwinds.”
The cut also comes a week before the bank’s traditional year-end compensation discussion. Even for those who remain at the firm, compensation figures are expected to fall, especially within investment banking.
This is in stark contrast to last year, when employees were showered with huge bonuses and a select few were even given special payments. At the time, Solomon’s $35 million compensation for 2021 puts him tied with Morgan Stanley’s James Gorman as the highest-paid CEO for a major US bank.
According to a person with knowledge of the matter, the firm expects to start the process in the middle of the week and the total number of people affected will not exceed 3,200. More than a third of those will likely be within its core trading and banking units, reflecting the broad nature of the cuts. The firm is also set to unveil financials linked to a new entity, including its credit card and installment-lending business, that will record more than $2 billion in pretax losses, the people said, discussing private information. Told not to.
A spokeswoman for the New York-based company declined to comment. Cuts at its investment bank have been compounded by the addition of non-front-office roles added to the divisional headcount in recent years. The bank still plans to continue recruiting, including inducting the regular analyst cadre later this year.
under the chief executive officer David SolomonThe data shows that the number of employees has increased by 34% since the end of 2018, reaching more than 49,000 as of 30 September. The scale of firings this year has also been hit by the firm’s decision to set aside its annual cuts of underperformers during the pandemic.
Slowdowns in various business sectors, a costly consumer-banking foray, and an uncertain outlook for the markets and the economy are prompting the bank to reduce costs. Merger activity and fees from companies raising money have rattled Wall Street, and plunging asset prices have eliminated another source of big gains. goldman From just one year ago. Those broader industry trends have been compounded by the bank’s missteps in its retail-banking forum, where losses grew at a much faster rate than forecast during the year.
The bank faced a 46% drop in profits on revenue of about $48 billion, according to analyst estimates. Still, that revenue mark has been bolstered by its trading division which will post another jump this year, helping the firm’s figure post its second-best performance on record.
The final job cut figure is significantly lower than earlier proposals in the management ranks that could have eliminated around 4,000 jobs.
The last major exercise of this scale came after the collapse of Lehman Brothers in 2008. Goldman at the time launched a plan to cut more than 3,000 jobs, or about 10% of its workforce, and top executives elected to forgo their bonuses.
sharing the pain
The latest cuts represent an acknowledgment that even better-performing businesses this year will take pains for firm-wide performance, which in a year of spending bloodshed is going to miss targets set for shareholders. Used to be.
That performance slippage was especially evident in the new unit called Platform Solutions, whose numbers stand out in the divisional breakdown. There’s more than $2 billion in losses made up by loan-loss provisions, which are amplified by new accounting rules that force firms to set aside more money as debt volumes rise, as well as ballooning expenses. it happens.
“There are a number of factors affecting the business outlook, including tightening monetary conditions slowing economic activity,” Solomon told employees at the end of the year. “For our leadership team, the focus is on preparing the firm to deal with these headwinds.”
The cut also comes a week before the bank’s traditional year-end compensation discussion. Even for those who remain at the firm, compensation figures are expected to fall, especially within investment banking.
This is in stark contrast to last year, when employees were showered with huge bonuses and a select few were even given special payments. At the time, Solomon’s $35 million compensation for 2021 puts him tied with Morgan Stanley’s James Gorman as the highest-paid CEO for a major US bank.