Goldman job cuts hit investment banks, global markets have been difficult sources

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

The long-awaited job cuts from the Wall Street titan are expected to represent the biggest reduction in headcount since the financial crisis. It is likely to affect most of the bank’s major divisions, with the investment banking arm facing the deepest cuts, a source told Reuters this month.

Just over 3,000 employees will be let go, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had started.

“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 associates, and we are providing support to ease their transitions. Our focus now is to right-size the firm for the opportunities ahead in a challenging macroeconomic environment.”

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

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

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

The latest cuts will reduce about 6% of Goldman’s workforce, which stood at 49,100 at the end of the third quarter.

The firm’s employees had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

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

Shares in Goldman Sachs have partially recovered from a 10% fall last year. The stock closed up 1.99% on Wednesday, up about 6% year to date.

SETUPS AROUND THE GLOBAL

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed trimming its private wealth management business and let go 16 private bankers across its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.

About eight employees were also laid off in Goldman’s research division in Hong Kong, the source added, with layoffs ongoing in investment banking and other divisions.

At Goldman’s central London hub, rainfall reduced staff options. Several security personnel actively patrolled the building’s entrance, but few people entered or left the property. A glimpse into the bank’s recreation area just outside the lobby showed a handful of employees in deep conversation, but little sign of drama. Wine bars and eateries local to the office also lacked post-lunch trade, in stark contrast to big layoffs of the past when unfortunate employees usually gathered to console each other and plan their next career moves.

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

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

The company is also cutting its annual bonus payouts this year to reflect depressed market conditions, with payouts expected to fall around 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 Kao and Christopher Cushing

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