Goldman Sachs Prepares for Layoffs as Deal-Making Slows

Two people who spoke on condition of anonymity because they were not authorized to speak publicly said Goldman was preparing for a round of layoffs.

Employees will be affected by the job cuts.

Every year, Goldman revisits its head count, letting go of employees based on their performance and the bank's needs. During the Pandemic, bankers complained of overwork, and that's when the program was paused. A person familiar with the situation said that this round of layoffs is likely to be at the lower end of the range.

In July, Goldman's chief financial officer, Denis Coleman, told analysts that the bank was likely to resume its annual performance review at the end of the year.

Concerns that the U.S. economy will tip into recession have been raised by the Federal Reserve's efforts to tame inflation. Further uncertainty has been added by the war in Ukranian.

Goldman reported in July that its second-quarter profit had fallen by more than half from a year earlier. Revenue from Goldman's investment banking division was down in the first half of the year. The firm didn't say how much of the fall was due to the lack of information. The hiring for the rest of the year was supposed to slow.

The amount of deals done in the United States so far this year is more than double what it was a year ago. Through the first half of the year, initial public offerings raised less money than they did last year. The number of deals has gone down.

Solomon said on the call that the market has gotten more challenging.

Mr. Solomon said that they have decided to reduce professional fees. While we are being disciplined about our expenses, we are not doing so to hurt our growth strategy.

Last year's ebullience was a far cry from Mr. Solomon's statements. Low interest rates and high financial markets caused a deal frenzy that required banks to bring on new workers.

It can be difficult for executives on Wall Street to decide how many layoffs to make. There are conflicting signs about the state of the U.S. economy, with some estimating that it may already be in a recession, or about to enter one, while others think that there will be no contraction. Deal-making, which can return as quickly as it fades, has shown recent signs of optimism, which makes bankers wary of finding themselves understaffed.

Wall Street banks might have too many deal makers.

ChrisConnors said that they don't need as many bodies as they have. The production fell off a cliff.