Goldman’s cuts focus on investment banking and global markets

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Goldman Sachs began laying off staff on Wednesday in a wide-ranging cost-cutting campaign, about a third of which came from the investment banking and global markets division, according to a source familiar with the matter.

The long-awaited Wall Street titan’s downsizing is expected to be the biggest since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking division facing the biggest cuts, a source told Reuters this month.

More than 3,000 employees will be laid off, the source, who could not be quoted, said on Monday. Another source confirmed on Wednesday the start of the cuts.

“We know this is a difficult time for people leaving the company,” a Goldman Sachs statement said Wednesday.

“We are grateful for all the contributions of our staff, and we are providing support to facilitate their transitions. Our goal now is to properly size the company for the opportunities ahead in a challenging macroeconomic environment.”

The cuts are part of broader reductions across the banking sector in the face of a global recession. At least 5,000 people are in the process of being laid off from various banks. In addition to Goldman’s $3,000, Morgan Stanley (NYSE:MS) has cut around 2% of its workforce, or 1,600 people, a source said last month, while HSBC is laying without at least 200 people, according to previous sources.

Last year has been difficult for all groups, including credit, equities and investment banking in general, said Paul Sorbera, president of Wall Street contracting firm Alliance Consulting.

“It’s part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”

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The cuts will reduce about 6 percent of Goldman’s headcount, which was 49,100 at the end of the third quarter.

The company’s workforce had increased by more than 10,000 jobs since the booming coronavirus pandemic.

The reductions come at a time when U.S. banking giants are expected to post lower profits this week. Goldman Sachs is expected to post a net profit of $2.16 billion in the fourth quarter, according to the average forecast of Refinitiv Eikon analysts, down 45 percent from $3.94 billion in the same period a year earlier.

Goldman Sachs shares have partially recovered from a 10% drop last year. On Wednesday it closed with a rise of 1.99%, and so far this year it has risen around 6%.

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