Goldman Sachs is planning for another round of job cuts for employees deemed underperformers, which could come as soon as late October, the Financial Times reported on Thursday, citing people familiar with the matter. The move follows a few hundred layoffs the bank announced in September and a few thousand more that it cut in January as part of its annual staff evaluation. According to the report, the cuts are at the lower end of the typical range that would see between 1% and 5% of company-wide employees lose their jobs and are focused on parts of its core investment banking and trading divisions.
Goldman is slashing costs as deal-making and other fees from raising money for companies have slumped amidst rising interest rates and a more challenging macroeconomic outlook. That has put a strain on profit, which slumped in the second quarter as writedowns from the company’s costly consumer-banking foray and falling asset prices took their toll.
The firm has yet to announce the next wave of cuts, and some workers may be able to stay if they have been doing well enough during the review process. Others may be offered a new contract or even a promotion. The move is the latest in a string of efforts by CEO David Solomon to trim the firm’s workforce, which ballooned during the pandemic as it hired for roles that were once considered redundant.
Solomon, who inherited the firm from former Chairman Lloyd Blankfein, has been trying to make it more stable by reducing its dependence on volatile revenue streams. That is easier said than done, though. The market has been in a downturn for months, so Goldman’s trading and advisory revenues have fallen sharply.
Investors have been skeptical of how much Goldman can do to boost earnings in the short term, particularly given that other central Wall Street banks have also reported disappointing results recently. The firm’s profits were down 16% in the first nine months of this year compared with a year earlier.
Several Goldman Sachs veterans have recently left the firm to join rival firms, including ex-investment banker Tammy Kiely, whom Evercore hired as head of tech banking. Several senior investment banking employees have also left to own businesses.
The move to slash staffing is also being taken as other big Wall Street banks are adjusting to an environment where merger activity and fees from raising money for companies have slumped amid a rout in global stock markets, high-interest rates, and global political tensions. JPMorgan Chase & Co and Morgan Stanley have cut their employee numbers, as have Citigroup Inc (C.N). That has left many workers wondering if their time at Goldman Sachs is nearing an end, too.
