Goldman job cuts hit investment banking and global markets hard

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off staff on Wednesday as part of a sweeping cost-cutting campaign, with around a third of those affected coming from the investment banking and global markets division, said a source familiar with the matter.

The long-awaited job cuts at the titan of Wall Street are set to represent the biggest contraction in the workforce since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking arm facing the biggest cuts, a source told Reuters this month.

Just over 3,000 employees will be laid off, the source, who could not be identified, said on Monday. A separate source confirmed on Wednesday that the cuts had started.

“We know this is a difficult time for people leaving the company,” a statement from Goldman Sachs said Wednesday.

“We are grateful for all the contributions of our employees and we provide them with support to facilitate their transitions. Our goal now is to size the company appropriately for the opportunities that are available to us in a difficult macroeconomic environment.”

The cuts are part of wider cuts in the banking sector as a possible global recession looms. At least 5,000 people are being cut off from various banks. In addition to Goldman’s 3,000, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 people, a source said last month while HSBC (HSBA.L) is cutting at least 200, sources said previously.

Last year was tough across all groups, including credit, equities and investment banking in general, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many have not made a budget.”

“It’s just part of Wall Street,” Sorbera said. “We are used to seeing layoffs.”

The latest cuts will reduce about 6% of Goldman’s workforce, which stood at 49,100 at the end of the third quarter.

The company’s workforce had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

The cuts come as US banking giants are expected to report lower profits this week. Goldman Sachs is expected to post net profit of $2.16 billion in the fourth quarter, according to an average forecast from analysts at Refinitiv Eikon, down 45% from net profit of $3.94 billion in the same period a year earlier.

Goldman Sachs shares have partially recovered from a 10% drop last year. The stock closed 1.99% higher on Wednesday, up about 6% year-to-date.

DISMISSALS AROUND THE WORLD

Goldman’s layoffs began Wednesday in Asia, where Goldman completed cutting its private wealth management business and laid off 16 private banking staff at its offices in Hong Kong, Singapore and China, a source familiar with the matter said. ‘affair.

About eight employees were also made redundant in Goldman’s research department in Hong Kong, the source added, with layoffs underway in the investment bank and other divisions.

At Goldman’s central hub in London, rainfall has reduced the prospect of staff gatherings. Several security personnel were actively patrolling the entrance to the building, but few people were entering or leaving the property. A glimpse of the bank’s recreation area just beyond its lobby showed a handful of employees deep in conversation but few signs of drama. The office’s local wine bars and restaurants also lacked after-lunch trade, in stark contrast to the large-scale layoffs of the past, when unlucky employees typically gathered to console each other and plan their next career moves.

In New York, employees were seen flocking to corporate headquarters during the morning rush.

Goldman’s layoff plans will be followed by a broader review of spending and business travel, the Financial Times reported on Wednesday, as the U.S. bank weighs the costs of a massive slowdown in corporate transactions and… collapse in capital market activity since the war in Ukraine. .

The company is also reducing its annual bonus payouts this year to reflect depressed market conditions, with payouts expected to fall by around 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.