The boss of Goldman Sachs has told staff he will cut jobs as early as next month as the US investment bank seeks to improve its profits amid concerns over the global economy, media have been told. The bank is reportedly looking to reduce about 8 percent of its 49,000 employees, which could lead to 4,000 job losses. The Guardian reported that a reduction of up to 40 percent in its bonus pool is also being considered.
It comes as the City of London is preparing to cut ranks, with thousands of jobs expected to go. After a bumper year in 2022, teams working on mergers and acquisitions in the coming 12 months are particularly at risk as interest rates rise, increasing the cost of borrowing the cash needed for new deals. Goldman Chief Executive David Solomon said the partnership is prepared for slower economic growth as central banks raise interest rates. Solomon said: We are conducting a careful review and discussions are still ongoing, we will reduce our workforce in the first half of January.
Investment banks enjoyed a boom in 2021, as companies launched a massive wave of mergers and acquisitions following the coronavirus pandemic lockdown. Goldman Sachs and other banks expanded to take advantage, but the number of lucrative deals fell back in 2022 amid rising interest rates worldwide. Solomon said in the message, there are a number of factors affecting the business environment, including tightening monetary conditions slowing economic activity. For our leadership team, the focus is on preparing the firm to deal with these headwinds.
Goldman is still forecasting to report big profits for this year and next. The Guardian reported that analysts surveyed by S&P Global Market Intelligence expect it to generate $12 billion in net profit for 2022 and $13 billion in 2023. It will be bigger than any year since the global financial crisis in 2009, except for its record profit of $21 billion in 2021.
However, the bank has been under pressure to improve its market valuation, which is lower than some US investment bank rivals such as Morgan Stanley. The Guardian reported that during 2022 its share price has declined by 14 percent.
