Job cuts in January: Goldman Sachs boss
David Solomon
Photo: Lucy Nicholson/ REUTERS
In end-of-year messages, those who share them often look ahead.
It is also usually characteristic of these speeches that they encourage people and look to the future in a positive mood.
The situation is different this year at Goldman Sachs. CEO
David Solomon
(60) is preparing the noble bankers for job cuts at the beginning of the new year.
Up to 4,000 of the last 49,000 jobs could be lost, reports the financial news agency Bloomberg, citing insiders.
That would be around 8 percent of the workforce.
In his traditional message to the workforce at the end of the year, Solomon did not yet give a specific number.
But he made it clear that the bank will cut staff.
The extent of the job cuts is being carefully examined and is still being discussed, but the bank assumes that the "staff reductions will take place in the first half of January".
Goldman Sachs expects a weaker economy and tighter monetary conditions in the coming year.
"Our leadership team is focused on preparing the company to weather these headwinds," Solomon said.
According to information from Bloomberg, up to 8 percent of the jobs could be cut in order to reduce costs and cushion the expected slump in profits and sales.
Solomon asked top management to come up with cost-cutting proposals.
Hire and Fire: Goldman Sachs had previously hired many new employees
The upcoming job cuts are significant.
However, Goldman Sachs had increased its staff significantly in the past three years in order to be able to keep up with the M&A boom.
At the end of 2019, the US investment bank still had 38,000 employees.
Usually, at the end of the year, the US bank also parted ways with colleagues who, from the management's point of view, had not performed as expected.
Goldman Sachs had put this practice on hold during the pandemic and now appears to be returning to this practice.
As early as the summer, Solomon warned that the bank would not only be hiring fewer staff, but would also be shedding underperforming employees.
Strong revenues, but significant costs
Analysts estimate that Goldman Sachs could post revenue of up to $48 billion this year, the second-best result behind last year's record sales.
However, an expensive foray into retail business and subsequent exit, as well as spending on technology and integrating businesses, have pushed costs up significantly this year.
According to earlier reports, Goldman Sachs expects the online bank "Marcus" to post a loss of 1.2 billion dollars in the current year after a slump in profits in the third quarter.
This would add up to around four billion dollars in start-up losses for the digital bank founded in 2016.
As a result, "Marcus" and the private customer business are to be merged into the wealth management division - a setback for Solomon, who had placed great hopes in the business field.
As part of the planned restructuring, investment banking is also to be merged with trading, it was said at the end of October.
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