Goldman Sachs Cuts a Little Deeper
It isn’t getting better out there.
Wall Street, which has been paring its ranks over the last year as it struggles with lackluster markets and new regulations, is cutting deeper as it heads into what is expected to be a rough summer.
Goldman Sachs laid off roughly 50 people last week, according to people briefed on the matter but not authorized to speak on the record. The cutbacks have rattled some people in the firm, in part because a number of the employees were managing directors and on the higher end of Goldman’s pay scale. Managing directors make a base of $500,000 and receive an annual bonus that can climb into the millions of dollars.
Last week’s layoffs are seen as a sign that Goldman is looking further up the food chain for additional cuts after already slashing 8.5 percent of its work force, or 3,000 people, in the last year. In addition it has cut more than $1.4 billion in noncompensation expenses from its operations over the last year or so.
A Goldman spokesman declined to comment.
The layoffs are largely economic; the firm like the rest of Wall Street is confronting a number of challenges to growth, in part because of Europe’s debt woes. Already, analysts have begun ratcheting down their second-quarter earnings estimates for the banks.
Yet, Goldman has also named new managers in some crucial divisions recently, which has led to some staffing cuts, whether for strategic or budgetary reasons. If markets don’t pick up, it is almost certain that the firm will make additional cuts later this year.
And Goldman isn’t the only firm cutting staff. Morgan Stanley reduced its work force by 2,935 during the 12 months that ended March 31. While it is a similar number to Goldman’s, this represents just 4.7 percent of its work force. If markets continue to deteriorate this summer, Morgan Stanley is likely to make additional small cuts.
Other firms have been cutting aggressively. Credit Suisse , for instance, had laid off people and earlier this year filed filed a notice with the New York Department of Labor, saying that it planned to lay off 109 people in the state before May 1.