Goldman Sachs, having weathered the worst of the subprime crisis, is planning to cut up to 15 percent of the workforce in its capital markets and related support units – the latest sign of the broad belt-tightening taking place across Wall Street.
Goldman has fared much better than other Wall Street firms since the credit crisis erupted last summer, but its investment banking revenues are still declining, especially in the US, amid what chief Lloyd Blankfein called “very difficult” market conditions.
According to sources familiar with the matter, the cuts are expected to come in the firm’s capital markets division, which includes investment banking, debt and equity underwriting and merger advice, sources said.
Employees were first notified about the cuts on Monday.
The layoffs come as Goldman reported quarterly profits of $1.5 billion on Tuesday but a decline in revenue growth across nearly all of its capital markets segments.
On the earnings conference call with analysts, Goldman Chief Financial Officer David Viniar said the firm’s overall headcount will grow slightly this year, with most of the growth coming from outside the US.
Goldman now employs about 32,000 people.
The layoffs at Goldman come as news emerged yesterday that Citigroup plans to cut 2,000 more trading and investment-banking jobs than previously announced.
The reductions are on top of about 4,000 disclosed in January, a person familiar with the plan said.
They add up to about 10 percent of the securities division’s 60,000 people and will be spread across offices in New York and London, as well as smaller sites in Asia and Europe, said the person, who declined to be identified because the bank hasn’t formally announced the decision.
Most of the cuts will take place by the end of March.
Wall Street firms have fired more than 30,000 employees in the last seven months as the price of mortgage-related assets plummeted.
Citigroup shares have plunged since October, wiping out almost half of the bank’s market value and costing CEO Charles “Chuck” Prince his job. It has also forced his successor, Vikram Pandit, to raise about $30 billion from outside investors.
Pandit, who stepped in last December, says he’s in a “front-to-back” review of the company’s expenses.
In January, the bank said it would take a $337 million after-tax restructuring charge to eliminate 4,200 jobs. Most of those were in the trading and investment-banking division.
Citigroup had 374,000 full-time employees as of Dec. 31.
The company’s institutional clients group, which includes trading and investment banking as well as hedge-fund management, has about 60,000 employees worldwide.
“Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm,” the bank said yesterday.