Goldman Sachs to cut over 3,000 jobs as revenues shrink
09 Jan 2023
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American multinational investment bank and financial services company Goldman Sachs Group will start cutting thousands of jobs across the firm as it faces a tough economic environment in the year ahead, reports citing sources familiar with the matter said on Monday.
The job cuts are expected to be over 3,000, according to one report while Bloomberg News reported on Sunday that Goldman would eliminate about 3,200 jobs.
While the layoffs are likely to affect most major divisions of the bank, it is expected to affect Goldman Sachs' investment banking division the most, according to the sources. Its loss-making consumer business also could shed hundreds of jobs after it scaled back plans for its direct-to-consumer unit Marcus, the sources said.
The development comes at a time when institutional banks have suffered a major slowdown in corporate deals amidst volatility in global financial markets. The job cuts are also induced by the firm’s decision to mostly set aside its annual cut of underperformers during the pandemic.
Bloomberg cited analysts’ estimate that the bank is facing a 46 per cent drop in profits, on about $48 billion of revenue.
Investment banks have suffered a major slowdown in corporate dealmaking activity as a result of volatile global financial markets.
Investment banking fees nearly halved in 2022, with $77 billion earned globally by the banks, down from $132.3 billion one year earlier, Dealogic data showed.
The total value of mergers and acquisitions globally had slumped 37% to $3.66 trillion by Dec. 20, according to Dealogic data, after hitting an all-time high of $5.9 trillion last year.
Equity capital markets (ECM) transactions by investment banks had dropped 66 per cent from 2021 levels to $517 billion worth by late December 2022, the lowest level since the early 2000s, according to Dealogic data.
However, Goldman Sach’s revenue mark has been buoyed by its trading division that will post another jump this year, helping the firmwide figure notch its second-best performance on record, the report added.
Goldman had 49,100 employees at the end of December last year, after adding significant numbers during the coronavirus pandemic.
The bank's chief executive David Solomon sent a year-end voice memo to staff warning of a headcount reduction in the first half of January, reports said. The job cuts come ahead of the bank's annual bonus payments which are usually delivered later in January and are expected to be down about 40 per cent.
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