Goldman Sachs made headlines on Thursday when it notified its local labor department that it would eliminate 65 jobs from its investment bank in New York, prompting the Post to remark that a “dreaded bloodbath” at Goldman has begun. Let’s consider that statement to include more than a touch of hyperbole.
Each year, right around this time, Goldman conducts its annual purge of underperformers, typically cutting around 5% of its staff as it makes new, post-bonus hires. While the bank doesn’t break out the number of employees within its investment bank, just shy of 6,000 people are currently registered with Goldman Sachs in New York, according to Finra. Disregarding the fact that not all employees within the investment bank are registered with the securities regulator, 65 job cuts would still be no more than a drop in the bucket – around 1%.
Gory metaphors aside, the cuts have already begun. The Post reported that roughly a dozen traders have been let go this week, split fairly evenly between equities and fixed income. However, the total number of redundancies at the end of the purge will be “way higher” in fixed income, according to the Post, which suggests the final tally will be north of the 65 that Goldman presented to the New York Department of Labor.
Fixed income traders shouldn’t be surprised at being the key target during this round of cuts. Back in February, the bank was said to be planning to eliminate 10 jobs across its commodities trading unit. Moreover, Goldman’s fixed income division underperformed last year, and CEO David Solomon previously noted the importance of further embracing electronic trading in 2019.
Late last year, Solomon mandated a 'front to back review' of the bank's businesses, which was to include department recommendations on job cuts. The review was said to be completed last month, according to the Wall Street Journal. Now we’re starting to see some of the findings. It appears they aren’t all that dire. One senior Goldman banker previously told us that news of the review was overblown from the start. "Trust me, this is just the same thing that happens every year," he said. Bloodbath or business as usual?
Meanwhile, those who survive the March cuts can revel in a pair of free khakis. Following news of Goldman’s more casual dress code, men’s retailer Indochino is now offering free custom chinos to any Goldman Sachs employee based in New York and New Jersey. Free pants (trousers if you're in the UK) – what other way would wealthy bankers want to celebrate one more year of gainful employment? The deal expires on April 26.
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