The deteriorating economy is taking its toll on America's big banks.
The drop in activity in the lucrative investment banking business has especially damaged Goldman Sachs, which in the third quarter of the year suffered a 44% drop in profits, to 2,962 million.
The bank is preparing to present the year-end results next week, but this week is going to start a round of thousands of layoffs.
According to the Bloomberg agency, the layoffs will not exceed 3,200, between 6% and 7% of its workforce, which amounted to 49,100 employees at the end of September.
If confirmed, it would be the biggest cut in the bank at least since the financial crisis that followed the fall of Lehman Brothers in 2008, when the entity cut its workforce by 10%, some 3,000 employees.
The layoffs will begin to be communicated this Wednesday, according to sources familiar with the situation cited by Reuters, and will be concentrated mainly in the investment banking area.
The entity has not yet publicly announced its decision.
The bank has recovered its performance evaluation adjustment program, through which it dismisses between 1% and 5% of its employees annually and which was paralyzed during the pandemic.
The more than 3,000 layoffs are in addition to those resulting from that program.
The suspension of these layoffs and the hiring have caused Goldman's workforce to have grown 46% since the end of 2017, when it had 33,600 employees.
With the layoffs, the bank is preparing for the possibility that the deterioration of the US economy will worsen this year.
The interest rate hikes approved by the Federal Reserve are cooling demand and have also caused falls on the stock market.
Higher interest rates have made it harder to finance large deals and corporate M&A activity has fallen.
In the third quarter of the year, Goldman Sachs, the Wall Street firm most dependent on the investment banking business, recorded a 57% drop in net income in that area, to 1,576 million dollars.
All kinds of commissions plummeted, those for underwriting fixed and variable income issues and those for advice, due to the slowdown in the capital markets.
Added to this were lower revenues from asset management and higher credit provisions.
Goldman took advantage of the presentation of quarterly results to announce a reorganization of its business, grouping investment banking and brokerage in the markets in an area called Global Banking and Markets, also uniting asset and wealth management in another division and leaving a third for platforms, which includes its alliances with Apple and General Motors in cards and its GreenSky digital brand.
According to anonymous sources cited by Bloomberg, the bank is also about to release financial results linked to a new unit that houses its credit card and installment loan business, which will post more than $2 billion in losses before taxes.
The big banks in the United States present their 2022 accounts in the coming days.
JP Morgan, Citi, Bank of America and Wells Fargo are scheduled to do so this Friday, while Goldman Sachs and Morgan Stanley have left it for early next year.
