Investment banking giant Goldman Sachs is reportedly laying off its employees, exercising its biggest round of job cuts since the Covid-19 pandemic, according to multiple reports.
The latest round of Goldman Sachs layoffs could start as early as next weeks, as the firm resumes the annual practice after two years.
According to Bloomberg, the company plans to cut several hundred jobs starting this month.
Goldman Sachs, as part of its annual layoff round called Strategic Resource Assessment,” or “SRA,” trims about 1% to 5% of its employees.
Reuters reported quoting a source that this year’s layoff is likely to stay in the lower end of that range, but would also mean that hundreds of employees would lose their jobs. The staff reductions may begin as early as next week, the person told Reuters.
Goldman’s headcount swelled to 47,000 at the end of June, up 15% from a year earlier. A 1% cut to staffing would imply a reduction of about 500 bankers, as per Reuters estimates.
The move from the banking giant is another true indication of a winter that has set in across the US industry amid a loss in revenue following record breaking quarters.
According to analysts cited by Bloomberg, Goldman Sachs is likely to post more than 40% drop in earnings this year.
In July, the investment bank had warned it might slow hiring and cut expenses as the economic outlook worsens. It reported a 48% slump in quarterly profit, which beat forecasts due to gains in fixed-income and commodities trading.
Goldman’s profit decline came almost entirely from the global economic uncertainty and the slowdown in deal-making happening at most banks. Investment banking revenues were down 41% from a year ago, as fees from taking companies public and helping them issue fresh debt nearly evaporated in the quarter.
The move to slow down its hiring foreshadowed the impending job cuts at Goldman Sachs, as the bank strived to rein in costs amid what it called a “challenging operating environment.”
The New York Times earlier reported on the upcoming layoffs, citing two people familiar with the plans. Goldman Sachs declined to comment.
The bank will also reinstate its annual performance review for employees at the end of the year, a process it had suspended during the pandemic, Chief Financial Officer Denis Coleman told analysts in July.
With risks of a US recession looming and the Federal Reserve raising interest rates aggressively to stem inflation, prospects for arranging and financing deals have dried up.
