The news: Goldman Sachs will reportedly begin cutting about 3,200 staff this week, embarking on extensive cost-cutting in response to disappointing results from multiple business areas amid continued market uncertainty.
More than a third of layoffs will likely be from Goldman’s core trading and banking units, according to Bloomberg, which cited a person with knowledge of the matter.
What’s behind mass layoffs? Three main factors are behind one of the biggest rounds of redundancies ever for the Wall Street giant.
The industry picture: Goldman Sachs is not alone in culling staff, especially at this time of year. Morgan Stanley and Citi are also making job cuts in response to falling revenues and weak markets. But the scale of Goldman’s layoffs highlights how the lender’s ambition to generate more stable income through diversification into areas like consumer banking led it to overstretch. That and the resources it poured into Marcus has forced it to make more drastic cuts than rivals.
In coming months, recession fears will force other banks to ax employees in a bid to slash costs. Goldman’s plans to offload more than 3,000 staff should serve as a warning to other lenders that overreaching can have costly repercussions if markets take a downturn.