Goldman Weighs Up To 4,000 Job Cuts In Potential 8% Pullback

(Bloomberg) -- Goldman Sachs Group Inc. may eliminate as many as 4,000 jobs, or roughly 8% of the workforce, as Chief Executive Officer 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 deliberations. 

Headcount at the Wall Street giant has surged in recent years as 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 dealmaking 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%. 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,” Solomon said at a conference last week. “We've set in motion certain expense-mitigation plans, but it will take some time to realize 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% for the first nine months of 2022, below the firm's target of 14% to 16%. 

Shares of the company, which have lost 9.8% this year, dropped 1.4% to $345.12 at 9:31 a.m. in New York.

Bonus Cuts

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. 

Solomon has said he's dialing back his ambitions for consumer banking and signaled 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 firm'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% since the end of 2018.

A spokesperson for the New York-based company declined to comment. Semafor reported the potential job cuts earlier Friday. 

(Updates with ROE, shares starting in sixth paragraph.)

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