Goldman Sachs considering fresh job cuts as dealmaking drought persists

Goldman Sachs is weighing a new round of job cuts amid a prolonged slump in dealmaking that has hurt profits at the investment bank, according to people familiar with the matter.

The bank is planning to eliminate no less than 250 jobs, mainly at the senior level, including managing directors, said one of the people.

The potential move would follow deep cuts of about 3,200 jobs, or 6.5 percent of its workforce, in January, leaving a workforce of about 45,000 employees worldwide.

The Financial Times reported that Chief Executive David Solomon told a private gathering of Goldman executives in January that they had made a mistake by not cutting jobs sooner.

The new potential round of job losses was first reported by The Wall Street Journal.

Goldman outlined $1 billion in savings in February, including $600 million from earlier job cuts and limiting replacement hiring.

The bank may also see another round of performance-based cuts in September, the people said. The review was an annual exercise at Goldman, like many other Wall Street banks, but was put on hold during the coronavirus pandemic.

The prospect of new job cuts underscores a sluggish first few months of 2023 for Wall Street. Corporate merger activity is off to the weakest start in a decade, slashing the amount investment banks earn from fees.

Dealmaking had already slowed in 2022, but Wall Street executives expressed optimism that the market could rebound in 2023. However, rising interest rates, an uncertain economic environment and recent stress in the banking industry have reduced many companies’ ability to transact.

Goldman’s first-quarter profit fell 18 percent year over year, as investment banking revenue plunged 26 percent from a year earlier.

Morgan Stanley eliminated several thousand jobs this month, while boutique investment bank Lazard said in April it would cut 10 percent of its workforce through 2023, sparking a slowdown in deal activity.