Goldman Sachs is gearing up for thousands of layoffs amid an investment banking downturn.
- One of Wall Street’s biggest banks is planning to lay off around 3,200 workers this week.
- The mass worker layoff is the biggest round of cuts at the company since the 2008 Financial Crisis.
- The layoff comes as the company faces a downturn in investment banking and continued economic challenges.
- Investment banking revenues were down 30-50% in 2022 compared to the year before, according to the data provider Dealogic.
Why it’s news
Growing interest rate hikes from the Federal Reserve, have caused many investment banks to see a hit taken on profits.
Markets have seen a sharp downturn with less investment banking causing many banks to cut down on spending and employees.
One of Wall Street’s biggest banks, Goldman Sach’s, is next up to start cutting down on employee numbers. The bank is looking to cut around 3,200 employees marking the biggest cutback since the 2008 Financial Crisis.
Goldman typically does a round of layoffs yearly, letting go of underperforming employees but put a pause on that during the pandemic as business was booming. The bank didn’t do yearly layoffs during 2020, 2021, or 2022 and now has to take an even larger number of employees off the table.
Goldman did a large amount of hiring during the pandemic as business had taken off considerably and ended September of 2022 with around 49,000 employees. Even after this large job cut, it is expected the company will still have more employees than it did before the pandemic.
Other hits to banking
Banking revenue has taken a big hit, and as a result, it is expected that bankers’ bonuses will be about 30% lower this year.
More than $50 billion of banking revenue was wiped out in 2022 as stock offerings and bond sales were down more than 40% compared to the year before, according to Dealogic data.
Many banks are having to cut back on bonuses as the sector hit a real low, some even predicting cuts of up to 30%.
Bankers typically see a large amount of their annual pay come from bonuses, so the cutbacks are leading to major disappointments.