Goldman Sachs CEO David Solomon is sounding the alarm about upcoming job cuts.
According to a new report, the company will be cutting its workforce in the coming weeks as noted in an audio message to staff. Solomon said that the company is currently conducting a review of its headcount and is in discussions about layoffs that are expected to occur in the first half of January, according to Bloomberg.
“There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity,” Solomon allegedly said. “For our leadership team, the focus is on preparing the firm to weather these headwinds.”
According to Bloomberg, top managers at Goldman Sachs have also been asked to identify potential cost-cutting targets, and the final number of job cuts has not yet been determined.
Earlier in the month, it was reported that the company was planning on trimming 8% of its workforce, or around 4,000 jobs.
Yahoo Finance reports:
The bank employed 49,100 people at the end of the third quarter, according to a regulatory filing, up from 43,000 during the same period last year following a ramp up in hiring throughout 2021 as dealmaking activity boomed after the height of the pandemic.
The layoff discussions come after a substantial slowdown in bank profits this year, with market volatility slashing investment banking revenue — and as many companies reduce their workforces to cut costs in anticipation of a potential recession.
At the Wall Street Journal’s CEO Council Summit earlier this month, Solomon acknowledged the banking industry’s aggressive hiring last year and in 2020 to keep up with record dealmaking activity during the period.
“It’s a natural phenomenon that you therefore have to trim in some areas and pull back, and so we’re going through the process of thinking about how we’re going to do that,” Solomon said. “But for sure, we’ll have to narrow our footprint a little bit.”
Goldman Sachs announced earlier this year during an earnings call that it would resume its annual performance reviews, which had been paused during the pandemic. This is a strategy that the company has historically used to eliminate underperforming bankers, in addition to slowing down hiring. A cut of up to 8% would go beyond the company’s usual annual elimination of poor performers.
Other financial institutions have also announced or implemented layoffs. Morgan Stanley is reported to have cut approximately 2% of its workforce this month, while Citigroup has also let some workers go. However, Citigroup emphasized that these layoffs were part of the company’s usual yearly process.
JPMorgan and Bank of America are taking a different approach.
“You need to be very careful when you have a bit of a downturn to start cutting bankers here and there, because you will hurt the possibility for growth going forward,” JPMorgan President and Chief Operating Officer Daniel Pinto said during an investor conference.