Goldman Sachs Boss Unveils Plan To Cut Jobs Amid Global Economy Fears – The boss of Goldman Sachs has informed staff that he will commence layoffs at the beginning of next month as the US investment firm strives to increase its earnings amidst global economic concerns. According to reports, the bank is considering cutting off up to 8% of its 49,000 employees, which may amount to 4,000 jobs. It is also thought to be considering cuts to its bonus pool of up to 40%.
Its chief executive, David Solomon, said the bank was bracing for slower economic growth as central banks raise interest rates, in an annual recorded end-of-year message to staff first reported by Bloomberg News. Solomon said: “We are conducting a careful review and while discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January.”
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Investment banks had enjoyed a boom year in 2021, as companies launched a huge wave of mergers and acquisitions after coronavirus pandemic lockdowns. Goldman Sachs and other banks expanded to take advantage, but the number of lucrative deals fell back in 2022 amid rising interest rates around the world. “There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity,” Solomon said in the message.
“For our leadership team, the focus is on preparing the firm to weather these headwinds.” Goldman is still forecast to report big profits for this year and next. Analysts surveyed by S&P Global Market Intelligence predict it will make $12bn (£10bn) in net profits for 2022, and $13bn in 2023. That would be bigger than any year since the global financial crisis in 2009, barring its record profits of $21bn in 2021. However, the bank has been under pressure to improve its stock market valuation, which is lower relative to some US investment bank rivals such as Morgan Stanley.
In 2022, the share price has declined by 14%. The completion of layoffs in the first two weeks of January would allow Goldman executives to reveal them to investors on 17 January, when the bank would release its annual results for 2022. Solomon is also scheduled to address investors in February with a restructuring plan he revealed in October in an effort to increase the company’s profitability.
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This plan, the second major reorganization during Solomon’s four-year tenure as CEO, entails reuniting two asset and wealth management departments that he previously separated in 2019 and halting its plans to expand deeper into consumer banking under the Marcus brand.
The bank’s investment strategists have predicted that better prospects for companies may be some way off. There will be “more volatility and declines during this bear market before reaching a low later in 2023” as interest rates peak and the worst of the expected recessions pass in economies around the world, they said.
