Goldman Sachs To Begin New Round Of Job Cuts

Goldman Sachs job cutsGoldman Sachs Group Inc. will begin a fresh round of job cuts as early as this week, sources familiar with the matter said on Monday, with its equities-trading business bracing for bigger cuts than fixed-income trading. The bank usually culls out the weakest 5 percent of its employees around now. But the cuts will likely be deeper in some businesses, particularly equities trading, where volumes and earnings are weak. The number of shares traded on major U.S. exchanges so far this year is down 7.2 percent.

Fixed-income trading at Goldman, which took big hits last year but has had better volumes this year, will likely see cuts of less than 5 percent, the sources said. It is unclear whether the cuts in totality will be larger than Goldman's typical 5 percent culling across the firm.

"As market activity has picked up in certain areas, we remain focused on prudently managing expenses and allocating resources to ensure we are best able to meet our clients' needs and generate good returns for our shareholders," said Goldman spokesman David Wells, who declined to comment on layoffs. The cuts underscore how even as Wall Street shows some signs of recovering, banks are looking to thin their ranks to boost profitability.

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Morgan Stanley, Bank of America Corp., Citigroup Inc., and UBS AG, have been cutting staff for the past few years, after revenue has been under pressure in multiple businesses. Regulations, meanwhile, are increasing banks' costs. Over the past two years, Goldman has cut its workforce by 9 percent, or 3,300 employees.

Earlier this month, Goldman's new chief financial officer, Harvey Schwartz, said that laying off more workers may be the way for banks to generate higher returns on equity for shareholders. The measure is important because it shows how much profit banks can squeeze from their balance sheets. Last year, Goldman's return-on-equity was 10.7 percent, an improvement from 2011, but still well below pre-financial crisis highs above 30 percent. Schwartz said he does not see Goldman's returns last year as "aspirational for the long term."

"I think the industry will migrate to higher returns because they will have to," Schwartz said, adding that it might be "a question of excess capacity coming out of the industry over a period of time."

More: 'Where Did My Co-Worker Go?' Stealth Layoffs Become More Widespread

High-Profile Exits
Goldman has also experienced a wave of departures of partners and managing directors, who are typically the company's biggest earners. Some big-name departures that have either occurred this year or were announced in internal memos. They include Jim O'Neill, the chairman of asset management, Henry Cornell, who retired as vice chairman of the merchant banking unit, Nick Burgin, who had been head of foreign-exchange, Scott Stanford, a co-head of global internet investment banking, and Ned Segal, who headed global software investment banking.

Former Goldman CFO David Viniar, who retired at the end of January, has said that the departures are a natural progression of senior executives leaving to make way for more junior employees to move up the ranks, though they have also helped the bank cut compensation costs. Last year, Goldman's paid out 37.9 percent of its revenue to employees, down from 42.4 percent the previous year. The lower compensation ratio was cheered by investors and analysts, who had been questioning the bank about cost-cutting for some time.

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Neil

Watch the documentary "Inside Job"; as the interviewer asks one of these scum offenders, "How many mansions do you need"? Like the Supreme Court, the problem is there are too few that are ruling the masses.

February 27 2013 at 8:06 AM Report abuse rate up rate down Reply
BIG KELL

They should include Blanfein (sp) and Dimon in that group along with the rest of their cabal.

February 26 2013 at 7:41 PM Report abuse +1 rate up rate down Reply
Ol Bob

The book cooks will be working their fingers to the bone.

February 26 2013 at 6:40 PM Report abuse rate up rate down Reply
JimB

Sure they are cutting jobs ..... They are facing a gang of law-suites which will cost them billions of dollars ...... Customers should watch for changes in the amount of interest they receive on their savings accounts, increase in the daily balance so service charges can be charged ..... But, the top Executives will not be cutting their salaries, benifits nor their bonuses ..... The same goes for share-owners ..... Lower dividends more shares for splits ..... But, none of the Chief Executives will see jail like they should be ...........

February 26 2013 at 4:32 PM Report abuse +2 rate up rate down Reply
investrman

Tell Obama this. No, better tell Ben Bernanke this who was on Capitol Hill today testifying over Fed's QE programs and basically saying they are keeping a second set of books and playing aroound with fictitious actions to create a false sense of security with equities markets to stimulate growth in USA! And saying they are beign real careful and know what they are doing, and will keep ratesd near 0% until unemployment hits 6.5%, and then deleverage themselves from markets once real growth can support it....

What planet do these people live on???

February 26 2013 at 4:27 PM Report abuse +1 rate up rate down Reply
Alan

The pay these guys earn is absolutely unbelievable. What morons decided they deserved that kind of income?

February 26 2013 at 4:12 PM Report abuse +2 rate up rate down Reply
c.mertz

How can they afford to layoff employes? With all the gazillions of dollars that obama says these money grubbing capitalists are stealing from all those poor 99 percenters, you would think that they would have to hire extra people just to hep carry their wallets.

February 26 2013 at 2:46 PM Report abuse +1 rate up rate down Reply
teeveequeen

welcome to Obama World ... where unemployment is the "new normal"

February 26 2013 at 1:52 PM Report abuse rate up rate down Reply
1 reply to teeveequeen's comment
Alan

queen, what doe GS have to do with Obama?- Nothing.

February 26 2013 at 4:13 PM Report abuse +1 rate up rate down Reply

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