Goldman Sachs, one of the leading global investment firms across the globe has announced the laying off of 3,200 of its staff following the massive round of job cuts it has started.
The cuts are as a result of the investment company’s efforts to reduce costs in response to decreasing profits.
The total staff to be laid off roughly amounts to 6.5% of its workforce, including the company’s staff in the United Kingdom (UK).
The reduction of Staff at Goldman Sachs is among the largest cuts recorded by banks in 2023, due to financial pressures caused by economic uncertainties.
To further slash costs, the company is scrutinizing its expenses, including bonuses and the acquisition of two private jets, which were acquired in contrast to their previous policy.
“We’re looking at expenses in every corner of the firm, so it’s ridiculous to focus on any single segment or item.”
A spokesman reported to the British Broadcasting Corporation, BBC.
Goldman, which employs roughly 49,000 people worldwide and about 6,000 people in the UK, has already cut hundreds of jobs this year.
Simon Jack, a business editor speaking to the latest events at Goldman stated that the company typically reduces its workforce by 3-5% every year as part of what it terms its Annual Strategic Resource Allocation (SRA).
“So getting rid of over 6% is a bigger cull than usual but the SRA is also conducted with market conditions in mind.”
Simon Jack
This move by Goldman follows a hiring surge which has boosted headcount by roughly 10, 000 people since December 2019.
Recently though, David Solomon, the Chief Executive Officer (CEO) at Goldman, has expressed concerns about the economic outlook and stated that clients are being tactful and that he wants to slash costs.
Jack noted that staff costs at Goldman were high (their staff are paid very well). Meanwhile, this also explains why it is the first cut on jobs when surgery (a massive cut) is needed to keep the business running, Jack explained.
Goldman’s Dwindling Revenues
The bank’s overall revenues have decreased by 20% in the first nine months of the year, relative to the same period in the previous year, when business was thriving. Additionally, profits have decreased even more significantly.
Simon Jack, in his analysis of the company’s revenues disclosed that a lot of Goldman’s revenues was derived from advising on big mergers and acquisitions.
“Global deal-making fell very sharply in the last half of 2022 as the cost of debt to finance transactions rose after a decade close to zero as central banks lifted interest rates to fight inflation.
“It is also very likely that many major economies will be slowing in 2023, so it is not surprising to see the belt-tightening at banks like Goldman set a couple of notches tighter.”
Simon Jack
In the meantime, Goldman is not first among the rest to be laying off its workforce.
Morgan Stanley and Citigroup are among other major banks to have laid off staff in recent months as economic uncertainty builds and mergers and stock listings are being dampened due to a market recession.
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