Goldman Sachs to cut up to 4,000 jobs in January

New York — Goldman Sachs is planning to cut thousands of employees in January to navigate a difficult economic environment, a source familiar with the matter said.

The layoffs are the latest sign that cuts are accelerating across Wall Street as deal making dries up. Investment banking revenues have plunged this year amid a slowdown in mergers and share offerings, marking a stark reversal from a blockbuster 2021 when bankers received big pay bumps.

Goldman Sachs had 49,100 employees at the end of the third quarter after adding significant numbers of staff during the pandemic. Its headcount will remain above pre-pandemic levels, the source said. The workforce stood at 38,300 at the end of 2019, according to a filing.

The bank is weighing a sharp cut to the annual bonus pool this year, a separate source familiar with the matter said. That compares with increases of 40% to 50% for top-performing investment bankers in 2021, Reuters reported in January, citing people with direct knowledge 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 said in a note.

The latest plan would include hundreds of employees being cut from Goldman’s consumer business, a source said.

The bank signalled it was scaling back its ambitions for Marcus, the loss-making consumer unit, in October. Goldman also plans to stop originating unsecured consumer loans, a source familiar with the move told Reuters earlier this week, another sign it is stepping back 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 reshuffle that also merged the trading and investment banking units.

Trading and investment banking — the traditional drivers of Goldman’s profit — 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 the top job.

Global news platform Semafor earlier on Friday reported that Goldman will lay off up to 4,000 people as the Wall Street bank struggles to meet profit targets, citing people familiar with the matter.

Goldman Sachs declined to comment.

The latest job cut plans come after Goldman cut about 500 employees in September, after pausing the annual practice for two years during the pandemic, a source familiar with the matter told Reuters at the time.

The investment bank had first warned in July that it might slow hiring and cut expenses.

Global banks, including Morgan Stanley and Citigroup, have reduced their workforces in recent months as a deal making boom on Wall Street fizzled out due to high interest rates, tensions between the US and China, the war between Russia and Ukraine and soaring inflation.

Reuters