Bitter week at Goldman Sachs, where the trap on 3,200 jobs will be triggered in a few days.
It is, remember the Bloomberg, of one of the strongest slimming treatments in which one of Wall Street’s symbolic financial institutions has embarked. For the financial agency, according to whose sources the process of reducing personnel will begin in the middle of the week, more than a third of the cuts will come in the trading and banking division. There should also be updates regarding the performance of the new credit card and consumer credit business, which should report a loss of over 2 billion dollars before tax. In short, a difficult start.
There are some dynamics that help explain the reason for these deep cuts. Under the leadership of CEO David Solomon, Goldman’s workforce has risen 34% since the end of 2018, reaching almost 50,000 at the end of September. Furthermore, the financial agency recalls, the extent of the cuts in this round is also conditioned by the fact that Goldman, during the pandemic, did not in fact practice the annual layoffs it usually carries out with respect to personnel whose performance is not deemed adequate . There would therefore be something of a backlog of cuts to catch up, now that the recession is in sight and uncertainties suggest the greatest possible cost savings.
The final amount of the cuts should still be less than the 4,000 initially planned by management. Many business lines are slowing down, the prospects for markets and the economy in general are uncertain. Furthermore, M&A and listing or capital raising activities in general have slowed down sharply, and so the fees collected by the banks are languishing.
Other Wall Street investment banks also recently announced downsizing. Morgan Stanley is laying off about 2% of its employees, or 1,600 people, according to various American media. Goldman Sachs saw its net income plunge 44% in the third quarter but still generated better-than-expected results thanks to its brokerage business.