Recession-weary Goldman Sachs is drawing up a layoff plan which may see as many as 3,900 employees pack their bags and go starting in January.
This is likely to send out an indication of what the job market will be in the next year. It is believed that the drastic move is precipitated by stiff competition from Morgan Stanley.
Media reports quoted Chief Executive David Solomon, who hinted at taking such a drastic step to reduce headcount. Solomon said he urgently seeks to scale up the bank's profitability amid economic headwinds.
The plans are being finalised, 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 staring at an uncertain future. Investment banking fees have tumbled 35 per cent in the year to date, according to Refinitiv data.
Reports suggested that pressure is mounting on Goldman to ramp up margins because Solomon is trying to improve the bank’s stock market valuation.
It has lagged behind peers such as Morgan Stanley for years.
In October, the bank announced 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.
Solomon hinted at 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.
He further said the bank has set in motion certain expense mitigation plans, but it will take some time to realise the benefits.