the Goldman Sachs And it is preparing for one of its biggest rounds of layoffs ever as it approved a plan to cut about 3,200 jobs this week, in a decision by the bank’s leadership to cut deeper than rivals.
the Goldman The process should begin by midweek, and the total number of those affected will not exceed 3,200, according to a person familiar with the matter. More than a third of the layoffs are likely to be in trading and banking units, which indicates the scale of the cuts.
The people, who asked not to be identified, said the company is also about to disclose financial data associated with a new unit that includes its credit card and installment lending business, which will record more than $2 billion in pre-tax losses.
A Goldman New York spokesman declined to comment. Layoffs in investment banking are being augmented by the inclusion of positions outside the front office that have been added to the division’s headcount in recent years.
The bank still has plans to continue hiring, which includes the Analyst category later this year.
Under the leadership of CEO David SolomonThe number of employees has jumped 34% since the end of 2018, after passing 49,000 on Sept. 30, according to the data. The size of the layoffs this year is also affected by the company’s decision not to make annual cuts related to poor performance during the pandemic.
A slowdown in many areas of business, exorbitant investment in the consumer banking sector and an uncertain scenario for the markets and the economy led the bank to cut costs.
Merger activity and corporate fund-raising committees have been affected Wall Street. In addition, falling asset prices wiped out another source of solid earnings for Goldman just a year ago. Broader industry trends were exacerbated by mistakes made by the institution in its bet on retail banking, accumulating losses at a much faster-than-expected pace over the course of the year.
That resulted in a 46% drop in earnings from about $48 billion in revenue, according to analyst estimates. However, those billings were driven by the trading division, which tends to register expansion again this year, which could help Goldman achieve its second-best performance ever.
The final number of layoffs is much lower than previous proposals for management positions, which would have eliminated nearly 4,000. Careers.
The last major cut of this magnitude occurred after the collapse of Lehman Brothers in 2008. Goldman embarked on a plan to cut more than 3,000 jobs, or roughly 10% of the workforce at the time, and top executives chose to forgo their bonuses.
The latest cuts are an acknowledgment that even the best-performing sectors this year will also have to grapple with issues affecting the company as a whole, which will not reach targets set for shareholders in the year of the expense cut.
This poor performance was particularly evident in the new unit called Platform Solutions, whose numbers stand out when analyzed separately.
The more than $2 billion impact is compounded by provisions for loan losses, exacerbated by new accounting rules that force the bank to set aside more cash as lending volumes grow and expenses increase.