Goldman Sachs’ David Solomon says job cuts will come in January

Goldman Sachs is preparing for a cull of its workforce in the coming weeks, chief executive David Solomon said in a message to staff, as the bank looks to reverse a recent expansion drive and scale back its ambitions in consumer finance.

“While discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January,” Solomon said in a year-end voicemail message sent to many of the group’s 49,000 employees.

“There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity,” he added. “For our leadership team, the focus is on preparing the firm to weather these headwinds.”

Goldman declined to comment.

The group has considered firing up to 8 per cent of staff, people familiar with its planning said earlier this month. Investment bankers who survive the cuts could face bonus reductions of 40 per cent or more, the people added.

Solomon’s bleak year-end message, first reported by Bloomberg, underscores how far the bank’s fortunes have sunk in the year since he presented record 2021 results to shareholders and staff enjoyed blockbuster bonuses.

Profits at Goldman’s investment bank have since dropped, it has begun reversing an expensive push into retail banking and has faced a string of damaging accusations about the treatment of female employees.

Despite Solomon’s efforts to build businesses with steady revenues, Goldman still relies heavily on volatile profits from its investment banking and trading operations, to which investors do not assign much value.

Analyst forecasts suggest that Goldman’s revenues and profits have fallen faster this year than those of JPMorgan Chase, Morgan Stanley, Bank of America and other more diversified rivals.

A January round of bloodletting would allow Solomon to present a leaner cost structure when he hosts the bank’s investor day in February.

The event — only the second of its kind in Goldman’s 23-year spell as a public company — will be Solomon’s chance to persuade investors that a reorganisation made in October has put the bank on track to hit profit targets for 2023 during what many believe will be a recession.