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Since many Goldman Sachs bankers will be out of the party by 2023, they should enjoy their New Year’s Eve celebrations.
The CEO of the investment bank, David Solomon, informed colleagues in his yearly year-end memo that mass layoffs would start soon.
Solomon stated in a voice message on Wednesday that “we are doing a rigorous analysis and while negotiations are still ongoing, we estimate our workforce reduction will take place in the first part of January.”
Solomon has been announcing “bumpy times ahead” and that he is sharpening the ax to fire additional employees from the company over the past month. The communication served as a sobering warning that the culling may happen any day now.
According to Solomon, “there are several variables affecting the business environment, including tightening monetary conditions that are slowing down economic activity.” We must go slowly and use our resources judiciously.
A Goldman Sachs representative declined to comment on Thursday.
Earlier this month, Semafor announced that the world’s largest investment bank would fire 4,000 “poor performing” employees, or about 8% of its workforce. Insiders pointed out that it might end up being a smaller layoff than expected.
At a conference this month, Solomon stated, “We continue to face headwinds on our expense lines, particularly in the short term.” “We’ve put some expense mitigation initiatives in place, but it will take some time to see the results,”
In the end, he continued, “We will remain agile and size the firm to reflect the potential set.
The year-end memo comes as major banks’ revenues plummet and the senior executives at those companies consider staff reductions in light of the weakening economy. Goldman reduced underperforms by 1% to 5% in September.
Even if the economic situation is worrying for all of the Wall Street banks, Goldman seems to be in a particularly perilous position. The Post reported earlier this week that several Goldman partners don’t think Solomon is capable of leading the illustrious company. Banks like Morgan Stanley and JPMorgan are much larger than Goldman, and insiders told The Post’s Charlie Gasparino that Solomon hasn’t done enough to keep up with the competition.
It’s still difficult for staff to embrace this new reality considering that just a year ago they were ready to haul in record bonuses, even though Solomon has been warning of cuts over the last few weeks — both to the workforce and to employees’ compensation.
According to data from compensation research firm Johnson Associates, Wall Street rewards this year are predicted to decline by as much as 45% as bankers deal with economic challenges and an impending recession.
Investment banking underwriters, whose bonuses increased 35% in 2021 during a surge in mergers and acquisitions, will experience the steepest decline this year as deal-making has plunged off a cliff.
However, some bankers are threatening to resign if they’re unhappy with their bonus, while most in the finance industry are merely trying to keep their jobs.
In a survey conducted by the social networking website Fishbowl, 72% of the 1,096 bankers at prestigious firms questioned stated they would think about leaving if their bonuses were reduced.
However, according to bankers surveyed by The Post, many are too concerned about the state of the economy to even consider quitting.
One Goldman banker observed that “everyone is on edge” and that most employees would be content to simply have a job, even if their incentives were underwhelming.
»Goldman CEO David Solomon speaks about layoffs.«