Goldman Sachs CEO addresses layoff speculations: No 'specific plans' at present

Goldman Sachs CEO David Solomon stated that the bank currently has no "specific plans" to carry out additional headcount reductions. The decision came after a deal drought led the bank to cut approximately 3,400 jobs in the last six months.

During a call with analysts, Solomon mentioned that Goldman Sachs would maintain its "regular performance-based process," which usually results in around 2% of employees being let go each year, said media reports. 

However, the bank does not have intentions for further significant cuts, as it has already carried out more reductions than at any time since the 2008 financial crisis. "I'm very glad that we were early in January, starting our headcount sizing," he said. "We feel good about where we are.

"We will do a performance review, but we have no other specific plan on headcount. We'll watch the trajectory of revenue in the current environment. As we go forward, we can always make adjustments if something changes,” added Solomon. 

During the second quarter, Goldman Sachs reported a 58% decrease in profits, primarily attributed to a $504 million impairment related to its consumer business and a significant decline in investment banking fees. Additionally, the company has already spent $260 million in severance payments since the beginning of the year.

According to Solomon, investment banking has been operating at its lowest level in over a decade. However, he mentioned that there has been an improvement as equity capital markets activity has increased and there is a rise in M&A dialogue, which makes the situation "definitely feel better."

Goldman Sachs was among the first to take significant action in cutting jobs, eliminating 3,200 positions in January and an additional 125 managing directors in June. Other competitors followed suit, with Morgan Stanley cutting 3,500 jobs, Citigroup slashing 5,000 roles, and Bank of America reducing headcount by 4,000 people in the second quarter.

The company experienced a significant 20% decline in investment banking fees, which was one of the steepest drops among Wall Street banks. The leading M&A business faced a challenging 46% fall in revenue, amounting to $645 million, falling short of analysts' expectations of $744 million.

According to data provider Dealogic, Goldman Sachs currently holds the second position globally in terms of investment banking fees for the year 2023. It has a market share of 6.7%, which is down from 7.5% at the same point in 2022.