NEW YORK, Dec. 16 (Reuters) – Goldman Sachs Group (GS.N) A source familiar with the matter said that thousands of employees are planning to lay off in a difficult economic environment.
The layoffs are the latest sign of accelerating cuts across Wall Street as deal-making dries up. Investment banking revenues have fallen this year amid a slowdown in mergers and equity offerings, marking a stark reversal from a groundbreaking 2021 when bankers received big pay bumps.
Goldman Sachs had 49,100 employees at the end of the third quarter after adding large numbers of employees during the pandemic. The source said its number will remain higher than pre-pandemic levels. The workforce numbered 38,300 at the end of 2019, according to one document.
A separate source familiar with the matter said the bank is considering sharply cutting its annual bonus pool this year. That compares to increases of between 40% and 50% for the best-performing investment bankers in 2021, Reuters reported in January, citing people with first-hand knowledge of the matter.
“GS needs to show that its costs are as variable as its revenues, especially after a year when it offered special bonuses to senior managers during boom times,” wrote Mike Mayo, banking analyst at Wells Fargo.
“Goldman Sachs now needs to show that it can do the same when business isn’t doing well and that they stick to the old Wall Street adage that they eat what they kill,” he said in a note.
The consumer bank is struggling
The latest plan would include cutting hundreds of employees out of Boldman’s consumer business, a source said.
The bank indicated it was curbing its ambitions for Marcus, its loss-making consumer unit, in October. A source familiar with the move told Reuters earlier this week that Goldman also plans to stop issuing unsecured consumer loans, in another sign that it will back down from the business.
CEO David Solomon, who took the helm in 2018, has tried to diversify the company’s operations with Marcus. It was placed under the wealth business in October as part of a management shake-up that also consolidated its commercial and investment banking units.
Commercial and investment banking transactions — Goldman’s traditional drivers of earnings — accounted for nearly 65% of its revenue at the end of the third quarter, compared with 59% in the third quarter of 2018, when Solomon took over the top job.
Semaphore reported earlier Friday that Goldman will lay off as many as 4,000 people while the Wall Street bank struggles to meet profit targets, citing people familiar with the matter.
Goldman Sachs declined to comment.
A source familiar with the matter told Reuters at the time that the latest job cuts plans come after Goldman laid off 500 employees in September after halting the annual practice for two years during the pandemic.
The investment bank first warned in July that it could slow hiring and cut costs.
World banks, including Morgan Stanley (MS.N) City Group Inc (CN)has slashed its workforce in recent months as the dealmaking boom on Wall Street has faded due to rising interest rates, tensions between the United States and China, the war between Russia and Ukraine and soaring inflation.
(Report: Saeed Azhar and Nana Nguyen). Additional reporting by Noor Zainab Hussain and Mahnaz Yasmin in Bengaluru. Editing by Mark Porter
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