雅虎香港財經 Goldman Sachs (GS) to Slash Jobs in IB Division Amid Slump
As the sluggish market for deal-making continues, The Goldman Sachs Group, Inc. GS is considering another round of job cuts in the upcoming weeks,per people familiar with the matter.
In its latest round of layoff, the investment banking (IB) giant GS is likely to cut fewer than 250 jobs across seniority levels, and include partners and managing directors. This comes after Goldman trimmed its headcount by about 3,200 in the first quarter in its biggest round of layoffs since the 2008 financial crisis. Last year, the company cut about 500 jobs.
Similar to the fourth quarter of 2022, the overall IB business performance was weak in first-quarter 2023. Global mergers and acquisitions hit rock bottom in more than a decade in the first quarter of 2023, while volumes for initial public offerings reached the lowest level since 2019.
A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions. Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances dried up. The bond issuance volume witnessed a decline, too, as investors turned pessimistic.
Due to these, the company’s IB fees were $1.58 billion in first-quarter 20023, 26% lower year over year. Also, its IB fees backlog decreased sequentially.
Amid a muted deal-making environment that has dented the wall street biggie’s revenues, it is now aiming to improve efficiency by budget tightening. In February, the bank indicated its aim to improve the efficiency ratio by reducing headcount and trimming other expenses. The plan included $600 million in payroll reduction.
With this, Goldman has a medium-term target for its efficiency ratio of 60%, while it reported 68.7% at the end of first-quarter 2023. A lower efficiency ratio is an indicator of higher profitability.
Over the past six months, shares of GS have declined 13.8% compared with the industry’s fall of 17.4%.
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Currently, GS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GS is not the only one that is trimming its workforce. Many other Wall Street firms, including Bank of America BAC and Morgan Stanley MS, have been taking similar steps in their IB and wealth management divisions.
Last week, it was reported that Bank of America intended to eliminate around 40 positions in its Asia region’s IB unit. Of the affected employees, the majority are based out of Hong Kong, with a particular emphasis on China, and hold junior positions, per people familiar with the matter. BAC’s latest redeployment strategy aims to serve as a temporary measure in response to the dealmaking scarcity and slowdown in China’s economy.
Earlier this month, it was reported that Morgan Stanley would initiate another round of job cuts and has decided to lay off 3,000 jobs in the second quarter of 2023, according to a source familiar with the matter. Of this, MS is considering cutting around 7% of jobs in the Asia-Pacific region (excluding Japan). Last year, MS slashed roughly 50 IB jobs in the Asia-Pacific region, with a large number being China-focused positions.
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