Goldman Sachs bankers should love to pop the champagne on New Year’s Eve, because the party will be over for many of them in 2023.
Investment bank CEO David Solomon warned in his annual year-end memo to staff that mass layoffs will begin in the coming weeks.
“We are carefully considering and while discussions are still ongoing, we expect our downsizing to take place in the first half of January,” Solomon said in a voice memo on Wednesday.
Over the past month, Solomon has warned of “difficult times ahead” and signaled he is sharpening the ax to keep more people out of the business. But the email was a stark reminder that the showdown could be days away.
“There are a variety of factors impacting the business landscape, including tighter monetary conditions that are slowing economic activity,” Solomon said. “We must proceed with caution and manage our resources wisely.”
A Goldman Sachs spokesperson declined to comment Thursday.
Earlier this month, Semafor announced that the investment banking giant would lay off 4,000 “underperforming” employees, or around 8% of its workforce. Insiders noted that it could end up being a smaller layoff than some are predicting.
“We continue to see headwinds on our spending, especially in the near term,” Solomon told a conference this month. “We have some expense mitigation plans in place, but it will take some time to realize the benefits.”
“Ultimately, we will remain nimble and scale the business to opportunity,” he added.
The year-end note comes as profits at big banks plummet and top brass at those firms seek to cut staff amid an economic slowdown. In September, Goldman cut about 1% to 5% from underperformers.
With every bank on Wall Street facing troubling economic conditions, Goldman appears to be in a particularly precarious position. earlier this week, La Poste reports some Goldman partners believe Solomon is not up to the task of running the prestigious company. Goldman is dwarfed by the size of banks like Morgan Stanley and JPMorgan, and insiders believe Solomon hasn’t done enough to compete with rivals, insiders told the Post’s Charlie Gasparino.
While Solomon has warned of cuts in recent weeks – both in the workforce and in employee compensation – it is still difficult for employees to come to terms with this new reality given that barely a year ago, they were preparing for collect record bonuses.
This year, Wall Street payments should drop up 45% as financiers face economic headwinds and a looming recession, according to data from compensation consultancy Johnson Associates.
Investment bank underwriters – who have obtained the biggest bump in 2021 with bonuses up 35% amid a surge in mergers and acquisitions – will see the biggest drop this year after deal-making fell off a cliff.
But since many in finance simply hope to keep their jobs, some bankers are threatening to quit if they are unhappy with their bonuses.
According to a survey According to online social networking forum Fishbowl, 72% of 1,096 top corporate bankers surveyed said they would consider quitting if their bonuses were cut.
But bankers interviewed by The Post say they are too nervous about the economy to even think about quitting.
“Everyone is on edge,” said a Goldman banker, noting that most employees would be happy to have a job, even if their bonuses are disappointing.
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