Goldman Sachs will begin shedding thousands of jobs during the week

Jan 9 (Reuters) – Goldman Sachs Group (GS.N) will begin shedding thousands of jobs across the company from Wednesday, two sources familiar with the move said, as they prepare for a difficult economic environment.

A little over 3,000 employees will be laid off, one of the sources said, but the final number is not yet known. That level of layoffs would be the largest since the 2008 financial crisis, one of the sources said.

Sources could not be identified as the information has not yet been made public. Goldman Sachs declined to comment.

Bloomberg News reported Sunday that Goldman would cut about 3,200 jobs.

Goldman had 49,100 employees at the end of the third quarter after adding a significant number of employees during the coronavirus pandemic.

The layoffs are likely to affect most of the bank’s major businesses but should focus on Goldman Sachs’ investment banking arm, one of the sources said. Wall Street banks have suffered a significant slowdown in corporate operations as a result of volatile global financial markets.

Hundreds of jobs are also likely to be cut at Goldman Sachs’ consumer business, Marcus, after it scaled back plans for the loss-making unit, the sources said.

The bank’s chief executive, David Solomon, sent a voice memo to staff at the end of the year warning of staff cuts in the first half of January, two separate sources said. Goldman Sachs declined to comment on the memo.

The job cuts come ahead of the bank’s annual bonus payments, which are normally paid later in January and are expected to fall by around 40%.

The bank resumed its annual performance review process and downsizing in September after a two-year hiatus during the pandemic.

The Wall Street giant typically lays off about 1% to 5% of its employees each year. These new cuts come on top of previous layoffs.

Global banks, including Morgan Stanley (MS.N) and Citigroup Inc (CN), have reduced their workforces in recent months amid a deal-making boom on Wall Street fueled by high interest rates, US-China tensions and the war fizzled out between Russia and Ukraine and rising inflation.

Global investment banking fees nearly halved in 2022, with banks earning $77 billion compared to $132.3 billion a year earlier, data from Dealogic showed.

The total value of mergers and acquisitions (M&A) worldwide had fallen 37% to $3.66 trillion as of Dec. 20, after hitting an all-time high of $5.9 trillion last year, according to Dealogic data .

By the end of December 2022, banks had closed $517 billion worth of equity market (ECM) transactions, according to Dealogic data.

Despite the slowdown, Goldman’s top dealmakers told Reuters in recent interviews that they are bullish on an M&A rebound in the second half of 2023.

Reporting by Saeed Azhar in New York and Scott Murdoch in Sydney; Edited by Kenneth Maxwell, Christopher Cushing and Nick Zieminski

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Scott Murdoch

Thomson Reuters

Scott Murdoch has been a journalist for more than two decades, working for Thomson Reuters and News Corp in Australia. He has specialized in financial journalism for most of his career, covering equity and debt markets across Asia and Australian M&A. It is based in Sydney.