Investment Bank Goldman Sachs is expected to start cutting thousands of jobs companywide on Wednesday as the company prepares itself for a possible recession, according to Reuters.
While the number has not been finalized, Bloomberg reported that Goldman Sachs would cut 3,200 positions.
Goldman Sachs recently reported that it expects a 35% chance of a recession in the next 24 months.
Goldman went on a hiring spree during the pandemic, and with 49,100 jobs at the end of the third quarter, Goldman Sachs’s decision would eliminate roughly 7 percent of its workforce.
Many job cuts are expected to be centered around the company’s investment banking division. Rough times for global financial markets have resulted in a slowdown in corporate dealmaking, forcing the company to adjust accordingly.
Goldman Sachs is also expected to cut hundreds of jobs in its struggling direct-to-consumer business, Marcus, launched in 2016, according to Reuters.
Employees should not be too surprised by the decision, as CEO David Solomon sent a year-end memo to his staff warning about an upcoming headcount reduction in January, according to Reuters.
“We need to proceed with caution and manage our resources wisely,” wrote Solomon in the memo.
The New York Post reported that staffers at Goldman Sachs are calling the upcoming cuts “David’s Demolition Day.” It is expected to be the biggest wave of layoffs at the company since the 2008 financial crisis.
The job cuts are expected to come ahead of Goldman Sachs’s annual bonus payments, which tend to be distributed in January and are expected to be down 40%. The company’s shares are down over 11% year-to-date.
Goldman Sachs typically cuts its staff by 1-5% each year, but the latest round of layoffs is expected to come on top of those layoffs, according to Reuters.
A slowdown in dealmaking is likely responsible for the layoffs. The banking sector saw $517 billion worth of equity capital markets transactions by late December 2022, the lowest level since the early 2000s and down 66% from 2021, according to Dealogic data. The slowdown is reportedly due to the sharp rise and fall of “blank check” companies known as SPACs, which generated tons of investor excitement in the past two years.
The total value of mergers and acquisitions globally also fell 37% by December 20, to $3.66 trillion, after hitting an all-time high in 2021.
The news about Goldman Sachs comes on the heels of Amazon and Salesforce slashing more than 25,000 jobs, as reported by The Dallas Express.
