As a result of falling profits, investment giant Goldman Sachs has begun a massive round of job cuts all over the world. Up to 3,200 employees, or around 6.5 percent of the bank’s workforce, including UK employees, will be affected by the cuts.
Due to economic uncertainty putting lenders under pressure, the cuts are among the largest that banks have made this year. Goldman Sachs is also looking at its expenses, like bonuses and buying two private jets. In 2019, the company placed an order for the planes, a change from its previous policy that sparked concern at the time.
As the cost of debt to finance transactions rose after a decade close to zero as central banks raised interest rates to fight inflation, global deal-making fell very sharply in the second half of 2022. This is because advising on large mergers and acquisitions accounts for a significant portion of Goldman’s revenue.
In addition, it is highly likely that many major economies will slow in 2023, so it is not surprising that banks like Goldman have tightened their belts a little bit.
According to a spokesperson, it would be absurd to concentrate on a single product or segment because they are considering costs across the board. This year, Goldman Sachs has already eliminated hundreds of jobs, employing approximately 49,000 people worldwide and 6,000 in the UK.
As part of what it refers to as its annual Strategic Resource Allocation, Goldman Sachs will typically let go of 3 percent to 5 percent of its workforce each year. The SRA is also conducted with market conditions in mind, so removing over 6 percent is a larger cull than usual.
The company also mentioned staff reductions at other businesses following years of hiring. At Goldman Sachs, staff costs are high, but it also means that when the company needs surgery to stay profitable, it cuts first.