Goldman to cut thousands of staff as Wall Street layoffs intensify -source

NEW YORK, Dec 16 (Reuters) – Goldman Sachs Group Inc (GS.N) is planning to cut thousands of staff to navigate a tough financial surroundings, a supply aware of the matter stated.

The layoffs are the newest signal that cuts are accelerating throughout Wall Street as dealmaking dries up. Investment banking revenues have plunged this yr amid a slowdown in mergers and share choices, marking a stark reversal from a blockbuster 2021 when bankers obtained massive pay bumps.

Goldman Sachs had 49,100 staff on the finish of the third quarter after including vital numbers of staff through the pandemic. Its headcount will stay above pre-pandemic ranges, the supply stated. The workforce stood at 38,300 on the finish of 2019, in accordance to a submitting.

The quantity of staff that will probably be affected by the layoffs remains to be being mentioned, and particulars are anticipated to be finalized early subsequent yr, the supply stated.

The financial institution is weighing a pointy cut to the annual bonus pool this yr, a separate supply aware of the matter stated. That contrasts with will increase of 40% to 50% for top-performing funding bankers in 2021, Reuters reported in January, citing individuals with direct information of the matter.

“GS needs to show that its costs are as variable as its revenues, especially after a year when it provided special rewards to top managers during the boom times,” wrote Mike Mayo, a banking analyst at Wells Fargo.

“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 St. adage that they ‘eat what they kill,'” he stated in a be aware.

The firm’s inventory fell 1.3% in afternoon buying and selling alongside shares of JPMorgan & Chase Co (JPM.N) and Morgan Stanley (MS.N), which fell 0.6% and 1.3%, respectively.

Goldman shares have slumped nearly 10% this yr. But they’ve outperformed the broader S&P 500 financial institution index (.SPXBK), which is down 24% yr to date.

CONSUMER BANK STRUGGLES

The newest plan would come with a whole lot of staff being cut from Goldman’s client enterprise, a supply stated.

The financial institution signaled it was scaling again its ambitions for Marcus, the loss-making client unit, in October. Goldman additionally plans to cease originating unsecured client loans, a supply aware of the transfer informed Reuters earlier this week, one other signal it’s stepping again from the enterprise.

Chief Executive Officer David Solomon, who took the helm in 2018, has tried to diversify the corporate’s operations with Marcus. It was positioned below the wealth enterprise in October as half of a administration reshuffle that additionally merged the buying and selling and funding banking items.

Trading and funding banking — the standard drivers of Goldman’s revenue — accounted for practically 65% of its income on the finish of the third quarter, in contrast with 59% within the third quarter of 2018, when Solomon took the highest job.

Semafor earlier on Friday reported that Goldman will lay off as many as 4,000 individuals as the financial institution struggles to meet revenue targets, citing individuals aware of the matter.

Goldman Sachs declined to remark.

The newest plans come after Goldman cut about 500 staff in September, after pausing the annual observe for 2 years through the pandemic, a supply aware of the matter informed Reuters on the time.

The funding financial institution had first warned in July that it would sluggish hiring and scale back bills.

Global banks, together with Morgan Stanley (MS.N) and Citigroup Inc (C.N), have lowered their workforces in current months as a dealmaking increase on Wall Street fizzled out due to excessive rates of interest, tensions between the United States and China, the struggle between Russia and Ukraine, and hovering inflation.

Reporting by Saeed Azhar and Lananh Nguyen; Additional reporting by Noor Zainab Hussain and Mehnaz Yasmin in Bengaluru; Editing by Mark Porter

Our Standards: The Thomson Reuters Trust Principles.