The Goldman Sachs Group Inc. is set to initiate one of its biggest rounds of job cuts ever, as it plans to eliminate more than 3,000 positions and could announce the move as early as this week, according to sources familiar with the matter.
The planned job cuts come as Goldman Sachs and other investment banks have seen a big drop in fees tied to initial public offerings and described a cloudy outlook for merger and acquisition advising in 2023 due to economic uncertainty.
The job cuts are expected to be just over 3,000, one of the sources told Reuters, but the final number is yet to be determined. The sources could not be named as the information was not a public disclosure yet. Goldman Sachs declined to comment.
Bloomberg News reported on Sunday that Goldman would do away with about 3,200 positions. A source close to the issue echoed the same figure in a statement to Agence France-Presse (AFP).
Cuts across the firm could start from Wednesday, sources said, as Goldman Sachs prepares for a tough economic environment in the year ahead.
Goldman had 49,100 employees at the end of the third quarter, after adding significant numbers of staff during the coronavirus pandemic.
The layoffs are likely to affect most major bank divisions but could center on Goldman Sachs’ investment banking division, a source said. Institutional banks have suffered a major slowdown in corporate deal-making activity as a result of volatile global financial markets.
Hundreds of jobs are also likely to be reduced from Goldman Sachs’ loss-making consumer business after it scaled back plans for its direct-to-consumer unit Marcus, sources said.
The bank’s chief executive David Solomon sent a year-end voice memo to staff warning of a headcount reduction in the first half of January, two separate sources said. Goldman Sachs declined to comment on the memo.
The job cuts come ahead of the bank’s annual bonus payments which are usually delivered later in January and are expected to be down about 40%.
The bank restarted its annual job-cutting program in September which had been put on hold for two years during the pandemic.
The Wall Street giant typically trims about 1% to 5% of its staff each year. These new cuts come on top of those layoffs.
Investment banking fees nearly halved in 2022, with $77 billion earned globally by the banks, down from $132.3 billion a year earlier, as per Dealogic data.
The total value of mergers and acquisitions globally had slumped 37% to $3.66 trillion by Dec. 20, 2022, according to Dealogic data, after hitting an all-time high of $5.9 trillion last year.
Banks had executed $517 billion worth of equity capital markets (ECM) transactions by late December 2022, the lowest level since the early 2000s and a 66% drop from 2021's deal bonanza, according to Dealogic data.