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Goldman Sachs is reportedly planning to cut thousands of jobs as it faces a downturn in business due to economic uncertainty and a market downturn that has reduced demand for mergers and stock listings. The investment bank is said to be preparing cuts that could affect up to 8% of its global workforce, or nearly 4,000 people, with the reductions set to take effect early next year.
Details on how different offices and parts of the business will be affected are still being finalized. Goldman Sachs, which has a workforce of around 49,000 worldwide, already made hundreds of job cuts earlier in the year, resuming an annual cull of low-performers that had been paused due to the pandemic.
Bonuses are also expected to be smaller this year.
"Compensation at Goldman Sachs is determined by the performance of the entire bank, not within each business area," a Goldman spokesperson said in a statement to FT. "The compensation process is not yet completed, so any discussion or forecast on specific numbers is premature." Investment banking revenues have fallen significantly this year, leading to a 20% drop in overall revenues in the first nine months of the year, compared to 2021 when business was booming.
Profits have also fallen sharply. Chief executive David Solomon has repeatedly raised concerns about the economic outlook in recent months, saying clients were being cautious and the environment was driving him to look at reducing costs.
"We continue to see headwinds on our expense lines, particularly in the near term," Solomon said at a conference last week. "We've set in motion certain expense mitigation plans, but it will take some time to realize the benefits.
Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set." He recently said that he expects the U.S. to enter a recession soon. "I think most likely we might be in a recession in Europe, and so until you get to that point where you see a change — whether it’s in labor, the demand side — you are going to see central banks continue to move on that trajectory," he said.