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Goldman Sachs, ruler of the world, now contemplating cutting around 1,700 staff

While a random day trader/motivational speaker is going around telling the BBC that Goldman Sachs rules the world and everyone’s savings are about to disappear, Goldman Sachs is having a few other issues to deal with.

The New York Times says the bank is drawing up plans for deeper cost cuts and that it will probably announce them along with Q3 earnings on October 18th.

Where previously the bank intended to reduce costs by $1.2bn, it now plans to reduce them by $1.45bn, says the Times. If all the cuts were borne by employees, this would imply staff reductions of around 3,000 people based upon the current rate of annual compensation accrual per head. In fact, however, only 56% of costs at Goldman are staff-related, suggesting headcount might be reduced by only around 1,700. Then again, it may be reduced by more given the difficulty of reducing non-staff expenditure.

The alleged cost-cut-ramp-up comes after Barclays Capital analysts suggested Goldman may make a loss in the third quarter for the first time since Q4 2008. Yesterday, Brad Hintz at Bernstein Research adjusted his prediction of a $3.38 per share Q3 gain for Goldman to a -$0.20 Q3 loss. Unfortunately, M&A and investment banking have now followed sales and trading down the revenue hole.

If Goldman does cut 1,700 people before the end of the year, Europe and the US are likely to be most affected: the bank is apparently building up still in Singapore.

It’s worth bearing in mind, however, that the cuts of 1,700 would amount to a mere 5% of Goldman’s headcount and that Goldman has expanded employee numbers by around 160% over the past decade. This could be the start of something.

Comments (6)

  1. @Sarah
    What the trader was saying was very deep… It is not because GS is cutting 1700 staff that they are going bankcrupt….GS will always rule the world because it has too many connections at the top….

    As always I think your analysis is really poor seriously I really mean it….really poor……there is a deeper message that the trader on the video is trying to say.. and you missed that one

  2. @ Hungry

    Lay your paws off Sarah before I come there and hunt you down like a wild rabbit. I know who you are!

  3. @Hungry – you’re wasting your words. Sarah isn’t the open, learning type.

  4. The guy looks like a forex seminar shyster. No linkedin with verifiable connections or references to his past career anywhere apart from his own website.

  5. Hmm, the LinkedIn bit is the clincher. No LinkedIn no credibility. Plod take note when you are seeking out shady characters.

  6. This isn’t news — Goldman has always cut the “bottom 5-10%” of its staff every year, generally around October, based upon performance reviews. It’s a forced culling of the herd — makes everyone work especially hard to ensure they aren’t among those shown the door.

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