Goldman Sachs' 2023 job cuts: Deutsche Bank warned they were coming
Goldman Sachs is planning on laying off up to 4,000 people early next year, says Liz Hoffman, the former Wall Street Journal journalist now writing for Semafor. That would be an 8% cut in its headcount. Managers have reportedly been asked to identify low performers ahead of time.
While this possibly sounds like good news for high-performing Goldman Sachs staff worried about their bonuses, who might benefit from the pool being less thinly spread, on balance it doesn't sound great. Last time Goldman laid off 'low performers', insiders complained that medium and high performers were being let go too and that cuts were being made on a subjective basis. A lot of people at Goldman are going to spend the holidays worrying about what happens in the New Year.
Anyone surprised about the Reduction in Force (RiF) should, however, have read the tea leaves. Goldman has been on an epic hiring spree in the past five years, increasing headcount from 36,600 at the end of 2017 to 49,100 in the third quarter of 2022. Revenues and profits rose dramatically, from $22bn and $5bn respectively for the first nine months of 2016 to $47bn and $17bn for 9m 2021, but this year they've fallen back. At $37bn and $9.5bn, they suggest things are on the turn.
Matt O'Connor, Deutsche Bank's banking analyst helpfully spoke to Ashok Varadha, Goldman's head of markets a few weeks ago and seemed to imply that a deeper round of cuts was coming. "Mgmt feels confident in rightsizing the business reasonably quickly (ie 2023)," noted O'Connor. Although only a portion of Goldman's cuts will fall in the markets business, this rightsizing appears to be going ahead.
10% of the coming cuts are likely to fall in the consumer bank, but this still leaves 3,600 cuts elsewhere. It's a long time since Goldman made similar RiFs. 10% of jobs were cut in October 2008.
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