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Goldman job cuts hit investment banking hard, global markets – source


  • Massive layoffs, spending review draw Wall Street giant
  • Cuts are expected at all major divisions worldwide
  • Restructuring at the Asian wealth unit triggered the layoffs on Wednesday

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off employees on Wednesday in a sweeping cost-cutting campaign, with about a third of those affected coming from its investment banking and global markets division, a source familiar with the matter said.

The long-awaited job cuts at the Wall Street titan are expected to represent the biggest downsizing since the financial crisis. It is likely to affect most of the bank’s core divisions, with its investment banking facing the biggest cuts, a source told Reuters this month.

It’s just over 3000 employees will be released, the source, who could not be named, said Monday. A separate source confirmed on Wednesday that the layoffs had begun.

“We know this is a difficult time for people leaving the firm,” Goldman Sachs said in a statement on Wednesday.

“We are grateful for the contributions of all our people and are providing support to ease their transition. Our focus now is to right-size the firm for the opportunities ahead in a challenging macroeconomic environment.”

The layoffs are part of larger cuts in the banking industry as possible global recession looms. At least 5,000 people are in the process of being laid off by various banks. In addition to 3,000 from Goldman, Morgan Stanley (MS.N) has cut off about 2% of the workforce, or 1,600 people, a source said last month, while HSBC (HSBA.L) is spilled at least 200, sources said earlier.

Last year was challenging for all groups, including credit, equities and investment banking in general, said Paul Sorbera, president of Wall Street recruiting firm Alliance Consulting. “Many didn’t make budgets.”

“It’s just part of Wall Street,” Sorbera said. “We are used to seeing layoffs.

The latest layoffs will cut about 6 percent of Goldman’s workforce, which stood at 49,100 at the end of the third quarter.

The firm’s headcount has added more than 10,000 jobs since the coronavirus pandemic as markets have boomed.

The cuts come in line with forecasts from US banking giants report lower profits this week. Goldman Sachs is expected to post net income of $2.16 billion in the fourth quarter, according to an average forecast of analysts at Refinitiv Eikon, down 45% from net income of $3.94 billion in the same period a year earlier.

Shares of Goldman Sachs have partially recovered from a 10% drop last year. Shares closed up 1.99% on Wednesday, up about 6% year-to-date.

ABBREVIATIONS AROUND THE WORLD

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed cuts in its private wealth management business and laid off 16 private banking employees in its offices in Hong Kong, Singapore and China, a source familiar with the matter said.

About eight employees were also cut in Goldman’s Hong Kong research unit, the source added, with layoffs continuing in investment banking and other divisions.

At Goldman’s central London hub, rainfall reduced the prospect of staff crowding. Several security guards actively patrolled the entrance to the building, but few people entered or left the property. A glance at the bank’s lounge area just behind the lobby showed a handful of employees deep in conversation, but little sign of drama. Wine bars and eateries in the office area were also devoid of post-lunch trade, in stark contrast to the large-scale layoffs of the past, when unhappy employees would usually gather to console each other and plan their next career moves.

In New York, employees were seen rushing into headquarters during the morning rush hour.

Goldman’s layoff plans will be followed by a wider review of corporate travel and expenses, the Financial Times reported on Wednesday, as the US bank weighs the cost of a huge slowdown in corporate deals and a drop in capital markets activity since the war in Ukraine .

The company is also reducing its annual bonus payments this year to reflect depressed market conditions, with payouts expected to fall by about 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Cao and Christopher Cushing

Our standards: Thomson Reuters Trust Principles.


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