Approximately 250 employees are likely to be impacted by Goldman Sachs' latest round of job cuts, which will be the firm's third in a year. The news of the recent layoffs gained attention at a time when Wall Street's revenue was struggling. Senior executives in the banking sector are reconsidering expenses as a rebound in deal-making takes longer to materialise, which is when this development occurs.
According to reports cited by the news agency Reuters, Goldman Sachs may lay off partners and managing directors in addition to employees at lower seniority levels. Goldman Sachs has 45,400 employees as of the end of March this year.
The first wave of layoffs at Goldman Sachs took place in September 2022, resulting in the loss of several hundred positions. The second and largest round of layoffs ever, affecting almost 3,200 employees, occurred in January 2023.
The investment banking business announced ambitions to cut expenses by around $1 billion in February. Denis Coleman, the chief accounting officer of Goldman Sachs, told investors that cutting back on staff to increase productivity is still an option. Payroll reductions of $600 million were part of the reducing expenses strategy.
In the medium term, Goldman Sachs has set a target for its efficiency ratio, aiming for 60% as opposed to the 68.7% it recorded at the end of March. A lower efficiency ratio is often preferred by banks since it indicates increased profitability.
Layoffs are affecting staff across the investment banking sector as businesses scramble to cut expenses in the face of a US Federal Reserve interest rate increase and an uncertain economic outlook brought on by the conflict in Russia and Ukraine.
Morgan Stanley, a competitor of Goldman Sachs, also has plans to cut 3,000 workers in the second quarter. The second round of layoffs at Morgan Stanley in the last six months.
