Goldman Sachs considers laying off 8% of its workforce

The investment bank has already moved to slash its bonus pool for the year

The Goldman Sachs headquarters building in Manhattan, New York. The global investment bank has announced that it plans on cutting up to 8 per cent of its employees early next year. AFP

Goldman Sachs Group may eliminate as many as 4,000 jobs, or roughly 8 per cent of the workforce, as chief executive David Solomon battles to contain a slump in profit and revenue.

Top managers have been asked to identify potential cost-reduction targets, and no final job-cut number has been determined, a person familiar with the matter said, asking not to be identified discussing internal issues.

Headcount at the Wall Street giant has surged in recent years as Mr Solomon completed acquisitions to build a more diversified company.

A costly expansion into consumer banking left the unit with deep losses amid a slowdown in the business environment for deal making and slumping asset prices.

Spending on technology and integrating operations has also contributed to the cost bleed, with analysts predicting the company’s adjusted annual profit could fall 44 per cent.

The proposed cuts would mark a sharper pullback than plans disclosed by any of Goldman’s rivals as management struggles to achieve profitability targets.

“We continue to see headwinds on our expense lines, particularly in the near term,” Mr Solomon said at a conference last week.

“We’ve set in motion certain expense-mitigation plans, but it will take some time to realise the benefits. Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set.”

Goldman’s return on equity — a measure of profitability — stood at 12 per cent for the first nine months of the year, below the company’s target of 14 per cent to 16 per cent.

The bank has already moved to slash its bonus pool for the year, with compensation its largest expense, and is even reducing the payouts available to divisions that have seen performance improve.

Mr Solomon said he’s dialling back his ambitions for consumer banking and signalled he’s reviewing other business lines to manage headcount and limit costs.

Goldman has decided to eliminate at least a few hundred jobs from the retail banking operation, Bloomberg reported earlier this week.

The latest cuts go beyond the company’s annual exercise of weeding out underperforming staff, which was the focus just months ago.

The bank’s workforce surpassed 49,000 in this year’s third quarter, up 34 per cent since the end of 2018.

Semafor reported the potential job cuts on Friday.