January 09, 2023 (MLN): Goldman Sachs Group Inc. is embarking on one of its biggest rounds of job cuts ever as it locks in on a plan to eliminate about 3,200 positions this week, as per Bloomberg.
The firm is expected to start the process mid-week and the total number of people affected will not exceed 3,200, according to a person with knowledge of the matter.
More than a third of those will likely be from within its core trading and banking units, indicating the broad nature of the cuts, as reported.
The firm is also poised to unveil financials tied to a new unit that houses its credit card and installment-lending business, which will record more than $2 billion in pretax losses, the people said, asking not to be identified discussing private information.
However, the cuts in its investment bank are elevated by the inclusion of the non-front-office roles that were added to divisional headcount in recent years.
The bank still has plans to continue hiring, including inducting the regular analyst class later this year.
Moreover, headcount has jumped 34% since the end of 2018, climbing to more than 49,000 as of Sept. 30, data show. The scale of firings this year is also affected by the firm’s decision to mostly set aside its annual cut of underperformers during the pandemic under Chief Executive Officer David Solomon.
Similarly, slowdowns in various business lines, an expensive consumer-banking foray, and an uncertain outlook for markets and the economy are prompting the bank to batten down costs.
Merger activity and fees from raising money for companies have taken a hit across Wall Street, and a slump in asset prices has eliminated another source of big gains for Goldman from just a year ago.
As per Bloomberg's report, bank facing a 46% drop in profits, on about $48 bn 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 its second-best performance on record.
Those broader industry trends have been compounded by the bank’s mistakes in its retail-banking foray where losses piled up at a much faster rate than forecast through the year, as noted already.
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Posted on: 2023-01-09T14:33:46+05:00
