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Goldman Sachs is making the cuts in anticipation of a further decline in the economy this year.
Global investment bank Goldman Sachs Group Inc is expected to lay off about 3,200 workers beginning this week. This represents 6.5 percent of the firm’s 49,100 staff and is lower than the 8 percent projected last month as the upper limit for the job cuts.
The layoffs are expected to begin on Wednesday with the final figure being a result of internal talks between business heads and top management over the past month, reveals an anonymous source cited by Bloomberg. Over a third of the cuts of workers are expected to be from within Goldman Sachs Group’s core trading and banking units.
The investment bank’s CEO David Solomon started off Wall Street’s layoff season in September last year and went on to carry out one of the industry’s biggest job cuts. Over the last two years, bank employee numbers increased significantly, owing largely to the great increase in deals and trading activity. The momentum has died down, with data from a January 4 SIMFA report indicating that IPO issuance and total equity issuance were down 94.4% and 77.2% respectively year to date (YTD).
Goldman Sachs is making the cuts in anticipation of a further decline in the economy this year and in case stock and bonds issuance and mergers do not make a recovery. In October of last year, Solomon announced that the bank was scaling back its consumer banking ambitions and pivoting from its strategy of building a full-scale digital bank. This has contributed to the layoffs.
A source with knowledge of the internal operations of a major Wall Street firm states that if revenue goes below estimates in the coming two months, the industry could make more cuts. Investment banks are expected to be on high alert in the coming weeks.
“If things haven’t gotten better in the first quarter, we’ll have more changes,” compensation consultant Alan Johnson comments. “You can’t have these expensive people sitting around with nothing to do.”
This follows similar actions by Morgan Stanley, Citigroup, and Barclays in recent months. Troubled Credit Suisse, which is currently undergoing restructuring, stated that it would lay off 2,700 employees in the last three months of 2022 and aims to cut a total of 9,000 positions by 2025.
In the meantime, Goldman will reportedly move forward with plans to hire junior bankers and fill other roles as needed.