In a move that reverberates through the financial industry, Goldman Sachs has initiated workforce reductions as part of its annual review process.
The bank plans to cut between 3% and 4% of its workforce, equivalent to approximately 1,300 to 1,800 employees.
The Annual Review Process
Historically, Goldman Sachs’ annual review process has resulted in workforce reductions ranging from 2% to 7%. These variations depend on the bank’s financial outlook and prevailing market conditions.
Last year, the bank implemented a 6% cut in January, followed by additional layoffs in May and the fall. Now, as the bank navigates the post-pandemic landscape, it continues to assess its talent pool.
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The Current Layoffs at Goldman Sachs
The layoffs, which began recently, are expected to continue through the fall. They will impact various divisions across the bank, affecting both junior and senior roles.
While some departments will see deeper cuts than others, the trimming is taking place across Goldman’s business units.
A Goldman Sachs spokesperson, Tony Fratto, emphasized that these annual talent reviews are normal and customary.
He stated, “Our annual talent reviews are normal, standard, and customary, but otherwise unremarkable.” Despite the layoffs, Fratto noted that the bank’s total headcount is anticipated to be higher by the end of the year compared to 2023.
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Industry Trends and Economic Outlook
Goldman Sachs is not alone in this practice. Other major banks also employ similar strategies, identifying and eliminating underperforming employees.
In the first quarter of this year, the largest U.S. banks collectively cut over 5,000 jobs to manage costs in a challenging economic environment. Citigroup, for instance, made the most significant reduction by eliminating 2,000 positions.
Earlier this month, Goldman Sachs revised its outlook on the likelihood of a recession, lowering the probability to 20% from 25%. This adjustment was based on encouraging retail sales figures and unemployment claims data.
The bank’s economists have indicated that a positive jobs report, expected on September 6, could prompt them to further reduce the recession risk to 15%.
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