One of the biggest job cuts in Goldman Sachs Group Inc. history will take place this week as the bank plans to eliminate about 3,200 positions.
A person with knowledge of the matter says that the total number of people affected will be less than 3,200. More than a third of those will be from its core trading and banking units. More than $2 billion in pretax losses will be recorded by the new unit that houses the firm's credit card and installment-lending business.
The company is based in New York. The cuts in the investment bank are higher because of the addition of non front-office jobs. The analyst class will be inducted later this year.
The number of employees has gone up 34% since the end of last year, climbing to more than 49,000 as of September. The amount of firings this year is affected by the firm's decision to mostly set aside its annual cut of underperformers during the Pandemic.
Slow downs in various business lines, an expensive consumer-banking venture, and an uncertain outlook for markets and the economy are prompting the bank to cut 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. Those broader industry trends have been compounded by the bank's mistakes in its retail-banking venture.
According to analyst estimates, the bank faces a 42% drop in profits and $48 billion of revenue. The revenue mark has been boosted by its trading division, which will post another jump this year.
There were earlier proposals in management ranks that could have resulted in the elimination of thousands of jobs.
After the collapse of Lehman Brothers, the last major exercise of this scale was. Goldman had embarked on a plan to cut more than 3000 jobs, or 10% of its workforce, and top executives chose not to get their bonuses.
Businesses that outperformed this year will have to take the pain as well for a firm-wide performance that will miss targets set for shareholders in a year of expense bleed.
The new unit called Platform Solutions' numbers stand out in the division breakdown. New accounting rules that force the firm to set aside more money as loan volumes grow as well as ballooning expenses are to blame for the $2 billion hit there.
Solomon told staff that there were a variety of factors affecting the business landscape. The focus for our leadership team is to prepare the firm for these challenges.
A week before the bank's traditional year-end compensation discussions, the cuts came. Compensation figures are expected to fall even for those who remain at the firm.
It is a far cry from last year, when staffers were getting big bonus increases and a few were even given special payouts. Solomon was the highest paid CEO for a major U.S. bank at the time.
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