Goldman Sachs will cut jobs
Investment bankers who keep their jobs face bonus cuts of 40% or more
Goldman Sachs Chief Executive Officer David Solomon told employees in a memo that the bank is preparing to lay off employees in the coming weeks as it seeks to reverse its recent expansion efforts and scale back its consumer finance goals.
While talks are ongoing, Solomon said in a year-end voice message sent to many of the group's 49,000 employees, "We anticipate that our staff reductions will occur in the first half of January."
He continued, "There are several factors impacting the business environment, including tightening monetary conditions that are slowing economic growth." The goal of our leadership team is to get the company ready to meet these challenges.
People familiar with the group's preparations indicated earlier this month that it was considering laying off up to 8% of its staff. According to the sources, investment bankers who survive the layoffs face bonus cuts of up to 40%.
The bank's fortunes deteriorated dramatically in the year Solomon delivered record 2021 profits to shareholders and massive bonuses to employees, according to Solomon's depressing year-end letter, first reported by Bloomberg.
Since then, Goldman's investment bank's profits have declined, it has begun to reverse a costly push into retail banking, and it has been the subject of a series of negative allegations about its treatment of female employees.
Goldman remains highly dependent on the fluctuating earnings of its investment banking and trading divisions, which are not highly valued by investors, although Solomon is trying to create businesses with consistent earnings.
Analysts' forecasts show Goldman's revenue and profitability declining faster this year than those of its more diversified peers, including JPMorgan Chase, Morgan Stanley and Bank of America.
Solomon could present a leaner cost structure at the bank's investor day in February after conducting a round of bloodletting in January.
At the investor day, which is only the second in Goldman's 23-year history, Solomon will have the opportunity to convince investors that the bank is on track to meet its 2023 profit targets thanks to a restructuring implemented in October, despite many expecting a recession.