Hundreds of bankers at Goldman Sachs in New York, London and Asia have this week lost their jobs in a round of severe job cuts by the Wall Street powerhouse, which is expected to see about 3,200 jobs go, or 6.5% of staff, people familiar with the matter said.
The cuts are falling across the bank, including in the investment banking division after a sharp slowdown in deal activity in 2022. Chief executive David Solomon is trying to cut costs to improve profitability, after several years of significant hiring.
Goldman is not alone, but the scale of its redundancies have raised concerns that some of the sharpest cuts in years are looming across Wall Street and the City of London. Morgan Stanley has cut 2% of its workforce, or 1,600 people, and HSBC is shedding at least 200, Reuters reported. Nomura also started cutting tens of staff in Asia, Europe and the Americas this week, sources told IFR. Asset manager BlackRock is also shedding about 500 jobs, or about 2.5% of its staff, Reuters reported.
Many of the affected staff at Goldman were told on Wednesday. They included managing directors and more junior analysts and associates. Senior staff are likely to have a couple of weeks to leave, but more junior staff left within hours of being told.
“We know this is a difficult time for people leaving the firm. We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment,” a spokesman for Goldman said.
The cuts are across all regions and areas, including investment banking and trading desks, but also consumer banking, asset management and technology.
“We’re looking at expenses in every corner of the firm, so it’s ridiculous to focus on any single segment or item,” the spokesman said.
Goldman had 49,100 staff at the end of September, a 28% increase in just under three years from 38,300 at the end of 2019. Some of that was due to acquisitions, but the bank also bulked up during 2020 and 2021 when investment banking activity boomed and trading was strong. Sources said hiring across the industry has been aggressive for several years and now reality is biting during a slowdown, which bank chiefs are worried will last throughout 2023.
Trading activity remained strong in 2022, but fees from M&A activity, debt and equity issuance and syndicated loans fell sharply from the year before. Industry investment banking fees fell 33% from 2021, and bigger banks saw a steeper fall, with Goldman's fees tumbling 44%, according to Refinitiv estimates.
Solomon's attempt to cut costs will also affect bonuses for 2022, which are expected to be down sharply from the bumper payouts for 2021. Pay consulting firm Johnson Associates estimates bonuses for bankers in debt and equity underwriting for 2022 could be down up to 45% from a year earlier.
Goldman reports fourth-quarter and full-year earnings on Tuesday.