Goldman making 'targeted' job cuts amid 'pretty difficult' Wall Street slump

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Goldman Sachs (GS) Chief Operating Officer John Waldron said the company is now making a new round of "targeted" employee reductions, one of several Wall Street giants cutting jobs amid a dealmaking slump.

The cuts will amount to roughly 250 layoffs, said a person familiar with the matter, from a workforce of roughly 45,000. The eliminations follow a separate round of layoffs in January, when Goldman eliminated 3,200 workers, and additional layoffs last September.

Waldron, speaking at a conference in New York on Thursday, cited a "pretty difficult" environment for Wall Street as a reason for the cuts, which will help with a previously stated goal of reducing $600 million from payroll.

"We're more cautious. We're running the firm tighter," he said.

Goldman's stock fell 1.7% Thursday as of noon New York time. The stock is down 7.4% since the beginning of the year.

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'Preparing for a tougher environment'

Goldman is not the only Wall Street firm cutting back as deal making dries up. The slowdown is largely due to a rapid rise in interest rates, economic uncertainty and turmoil in the banking industry.

Most major banks that advise on mergers or IPO underwriting reported drops in fee revenue during the first quarter. The largest decrease of 26% belonged to Goldman Sachs (GS), followed by a 25% drop at Citigroup (C) and a 20% drop at Bank of America (BAC). JPMorgan Chase (JPM) saw investment banking revenue down 19%.

Many of these banks decided to eliminate more positions this year, according to media reports. Cuts at Morgan Stanley (MS) will amount to roughly 3,000, and JPMorgan is culling roughly 500 positions. Citigroup and Bank of America are making smaller reductions of a few hundred jobs each.

Goldman is planning for a total of $1 billion in expense cuts, including the new layoffs.

John Waldron, president and Chief Operating Officer of Goldman Sachs, speaks during the Goldman Sachs Investor Day at Goldman Sachs Headquarters in New York City, U.S., February 28, 2023. REUTERS/Brendan McDermid
John Waldron, Goldman's chief operating officer. REUTERS/Brendan McDermid

"We're preparing for a tougher environment," Waldron said Thursday. "We'd love to be surprised on the upside. We might be surprised on the upside. We can always flex into that but we definitely have a much more cautious tone.”

Waldron cited muted activity with private equity firms and less activity with larger companies, while pointing to middle market merger activity as a bright spot.

Trading also “is more sluggish,” said Waldron who added that compared to the second quarter a year ago, Goldman’s market division should post 25% lower revenue.

“We've had a couple of good weeks of equity capital markets activity. So you could envision that we might have a better back half of the year. We're not necessarily planning for that, but it certainly could happen,” Waldron added.

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