Goldman Plans New Round of Job Cuts as Pandemic Pause Ends
(Bloomberg) -- Goldman Sachs Group Inc. is preparing to trim its workforce for the second time in just three months, as a moratorium on firings during the pandemic gives way to a push to improve efficiency.
This round isn’t expected to exceed the roughly 400 positions the bank began eliminating in September, according to people with knowledge of the matter. But executives anticipate going deeper in the coming year, in what could eventually amount to one of the most significant staff reductions at the bank as it looks to deliver on a promise to rein in costs.
Big U.S. banks including Goldman Sachs pledged early this year to refrain from broad firings as the pandemic erupted across the country. The industry’s resolve has frayed as the virus has persisted, leaving executives to refocus on earlier cost-cutting initiatives. Goldman laid out a target in January to eliminate more than $1 billion in expenses, and it’s been examining how to meet that goal.
A spokeswoman for the bank reiterated its statement from September. “At the outbreak of the pandemic, the firm announced that it would suspend any job reductions,” the company said at the time. “The firm has made a decision to move forward with a modest number of layoffs.”
Unlike big traditional lenders bracing for steep losses on loans, Wall Street-oriented Goldman benefited from virus-related upheaval that drove a windfall to trading desks and new business to investment bankers. Senior leaders have been reluctant to use the cushion of a few good quarters to delay steps tied to snipping costs as they seek ways to boost the stock price.
Goldman is on pace to exceed $40 billion in annual revenue only for the third time ever, this time propelled by strength across a number of divisions. Even its nascent consumer unit has weathered the pandemic without getting too roughed up. But the bank’s leadership has been vexed by its stock, which has traded below its book value for much of David Solomon’s two-year tenure atop the firm. The measure shows the market values Goldman less than it values the sum of its own pieces.
Goldman, which typically dismisses its lowest-performing executives every year, had already backed off from that annual exercise to reassure jittery employees in an uncertain economic environment. With the pandemic dragging out and no certain end date, its leaders have reversed course and expressed a willingness to return to business-as-usual and take away the safety net.
The firm will also probably accelerate the shift of jobs away from global financial hubs into other cities such as Dallas to control costs. While the plans were under way even before the virus spread across the globe, the pandemic has given the bank’s leadership confidence that it can assign more roles to smaller locations than it had previously planned, one of the people said.
Financial firms have plowed ahead with reductions that were initially delayed by the pandemic. That includes the nation’s biggest banks, including Wells Fargo & Co. and Citigroup Inc., which were among the first to restart cuts after their stock prices slumped.
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