Goldman Sachs prepares to lay off almost 4,000 employees

Goldman Sachs is preparing to lay off as many as 3,900 employees starting in January as chief executive David Solomon seeks to boost the bank’s profitability amid economic headwinds.

The plans are still being drawn up, and it is possible that the current target for a cull of “up to 8 per cent” of its 49,000 global workforce will be slimmed down if the business outlook improves, according to three people familiar with the discussions.

Wall Street is contending with sharply reduced dealmaking and capital markets activity after a bumper 2021 that resulted in big hiring surges and large bonuses. Investment banking fees have tumbled 35 per cent in the year to date, according to Refinitiv data.

But Goldman is under particular pressure to improve margins because Solomon is trying to improve the bank’s stock market valuation, which has lagged behind peers for several years.

The bank announced a major overhaul in October that included a merger of the investment banking and trading division, as well as a pullback from consumer banking following investor criticism of its losses and escalating costs.

Goldman declined to comment, but Solomon nodded to the coming cuts at the bank’s financial services conference last week.

“We continue to see headwinds on our expense lines, particularly in the near term,” he said. “We’ve set in motion certain expense mitigation plans, but it will take some time to realise the benefits. Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set.”

One person familiar with the plans said that the cuts would be spread across the different divisions, rather than being concentrated in a single unit or country. However, the axe could fall hardest on the consumer business, and may lead to at least 400 positions being eliminated.

The job cut discussions, which go well beyond the bank’s recently reinstated annual cull of the worst performers, were first reported by Semafor.

This week, the Financial Times reported that Goldman was also preparing to slash the bonus pool for its 3,000 investment bankers by 40 per cent or more, the biggest drop since the 2008 financial crisis.