In a move that mirrors the current trend among major banks, Goldman Sachs is preparing to cut nearly 1,800 jobs as part of its annual review process. This decision, reported by The Wall Street Journal, highlights the ongoing challenges in the banking sector as institutions streamline their operations and adapt to evolving market conditions.
The layoffs are expected to affect various divisions within the bank and come as part of Goldman’s broader strategy to maintain efficiency and control costs.
Overview of the Planned Layoffs
Goldman Sachs is set to reduce its global workforce by approximately 1,300 to 1,800 employees, representing about 3% to 4% of its total workforce. As of late last year, the bank employed around 45,300 people, meaning these cuts will impact a significant number of roles across multiple divisions. This annual review process, known as the “Strategic Resource Assessment” (SRA), has already begun, with layoffs expected to continue through the fall of 2024.
The SRA is a standard practice at Goldman Sachs, designed to assess the performance and strategic fit of its employees. However, this year’s round of job cuts comes amidst a broader wave of layoffs across the financial sector, reflecting the ongoing pressures faced by banks as they navigate an uncertain economic landscape. Despite the reductions, Goldman’s overall headcount is expected to be higher at the end of 2024 compared to 2023, according to Tony Fratto, a spokesperson for the bank.
Reasons Behind the Layoffs
Goldman Sachs’ decision to proceed with these job cuts is influenced by several factors. One key reason is the need to maintain profitability in a challenging market environment. The bank, like many of its peers, is dealing with shifting economic conditions, including fluctuating interest rates, market volatility, and changing consumer behaviors. These factors have prompted banks to reassess their staffing levels and focus on core areas of growth.
In addition to economic pressures, Goldman Sachs has also been tightening its policies on in-office attendance. During the pandemic, many banks, including Goldman, relaxed their rules on remote work. However, with the return to more traditional work arrangements, the bank has become stricter about employees being physically present in the office. This shift in policy is another factor contributing to the decision to reduce staff.
Historically, Goldman Sachs has aimed to cut between 2% and 7% of its workforce annually based on performance and strategic needs. This range has fluctuated over time, depending on the bank’s financial outlook and market conditions. The current round of layoffs falls within this typical range, though the exact number of employees affected will depend on the final outcome of the review process.
Comparisons with Other Banks
Goldman Sachs is not alone in its approach to workforce reduction. Other major banks, such as YesBank and Citigroup, also conduct regular reviews to identify underperformers and streamline their operations. The trend of layoffs in the banking sector reflects a broader shift towards efficiency and cost management as banks adapt to the changing economic landscape.
Goldman Sachs’ Financial Performance
Despite the layoffs, Goldman Sachs has reported strong financial results in certain areas. In the second quarter of 2024, the bank saw a 21% increase in investment banking revenue compared to the previous year. Additionally, its asset and wealth management division experienced a 27% rise in revenue, indicating that certain parts of the business continue to perform well.
Goldman Sachs CEO David Solomon has expressed optimism about the future, stating that the bank is in the early stages of a recovery in capital markets and mergers and acquisitions (M&A). This positive outlook suggests that while the bank is making cuts in some areas, it remains focused on growth and profitability in key sectors.
