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As many as 1,500 Goldman Sachs employees may lose their jobs in coming weeks as Wall Street's most profitable bank conducts a periodic "culling" of its worst performers.

The exercise "is about performance, not layoffs,'' Goldman spokesman Lucas van Praag told Bloomberg. The company reviews the performance of "the bottom 5 percent" of the work force each year, and usually asks "a significant percentage" of that 5 percent to leave, he said.

His wording suggests that most of those let go will ultimately be replaced with new hires. If so, Goldman should have a relatively easy time raiding rivals of their best talent, since most other Wall Street firms are enduring tough times and expectations for 2008 bonuses are in a tailspin. Trimming its own ranks at this moment could even be seen as a shrewd tactical move to maximize Goldman's capacity for cherry-picking the street.

Still, that remains to be seen. Total employment at Goldman shot up by 8,000, or about 35 percent, in just the past two years. And its CFO last month voiced caution about the near-term outlook and said he expects to add employees at a slower pace in 2008 than in 2007. So there's a case to be made for leaving a portion of "culled" positions vacant, at least for awhile.

Morgan Stanley, Credit Suisse Reduce Headcounts

Meanwhile, layoffs continue at other bulge-bracket banks. Morgan Stanley is set to eliminate more than 1,000 jobs in a cost-cutting move, Reuters reported last Thursday. Those cutbacks mainly affect wealth management and investment management – areas where other banks have been expanding – plus back-office operations and technology staff. Institutional securities, which includes trading and investment banking, will not suffer a "substantial" job reduction, an unnamed source who was briefed on the moves told Reuters. He also said Morgan Stanley will add staff in some businesses, including more financial advisors and expanding its investment management offerings. Last year the bank eliminated 300 investment banking and trading jobs and 600 mortgage jobs.

Reuters also reported that Credit Suisse said it will cut about 500 investment banking division jobs, mostly in the global securities department.