Biggest Round of layoffs at Goldman Sachs

The final job reductions figure is significantly lower than earlier proposals in the management ranks that could have eliminated nearly 4,000 jobs

The layoffs are a part of the global investment banking giant's strategy to prepare for a tough economic environment in 2023.

In Short

• Goldman Sachs will cut over 3,000 positions across core trading and banking units

• Goldman Sachs CEO David Solomon had earlier warned employees about a headcount reduction.

• The company's decision comes in the wake of the worsening global economic environment.

A source who spoke to news agency Reuters said the jobs cuts are expected to be just over 3,000, but the final number is yet to be determined. However, a Bloomberg report has pegged the number of layoffs at the bank at 3,200 and that the process will start in a few days.

It may be noted that by the end of the third quarter, Goldman Sachs had just over 49,000 employees after it added a significant number of staff during the Covid-19 pandemic.

Goldman Sachs Chief Executive David Solomon had earlier warned employees about a headcount reduction in a year-end voice memo he sent to staff, according to two sources quoted by Reuters. However, Goldman Sachs had not commented on the memo at the time.

That’s left the bank facing a 46 percent drop in profits, on about $48 billion of revenue, according to analyst estimates. Still, that revenue mark has been buoyed by its trading division that will post another jump this year, helping the firmwide figure notch it’s second-best performance on record.

It’s a stark contrast from last year, when staffers were getting showered with big bonus increases and a select few were even granted special payouts.

At the time, Solomon’s $35 million compensation for 2021 put him alongside Morgan Stanley’s James Gorman as the highest-paid CEO for a Major US bank.

Other major firms like Citigroup and Barclays have also cut positions in view of declining revenue amid fears of an impending global recession.

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 situation for employees in industries such as IT and financial services could worsen as mid-sized firms may soon start replicating the decisions of major companies as a precautionary measure against the global economic slowdown.