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The Goldman Sachs Group, Inc. (GS - Free Report) is firing managing directors (MD) across the globe in response to the industry-wide plunge in deal-making activities, per a Bloomberg article that cited people familiar with the matter.
According to people familiar with the matter, who asked not to be identified as the cuts aren't public, the layoffs are currently in progress, which will affect nearly 125 MDs from several departments, including some investment banking (IB) positions.
Markedly, GS has undergone a minimum of three phases of job cuts within a year and these initiatives are part of the company's deep cost-savings drive.
Earlier this month, Goldman Sachs announced job cuts of more than 30 IB positions across the Asia region. During the first quarter of 2023, GS trimmed its headcount by 3,200, its biggest round of layoffs since the 2008 financial crisis. Last year, the company also cut about 500 jobs.
Global mergers and acquisitions and volumes for initial public offerings have been declining in the past few quarters. A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions, Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances died up. The bond issuance volume witnessed a decline too as investors turned pessimistic.
Amid theses, IB revenues declined in 2022 and the first quarter of 2023. Nonetheless, the same is likely to rebound in the near term as the company's robust client engagement, backed by digital disruption and transformation trends, and its decent investment banking backlog are positives. Therefore, these positives will likely give it an edge over its peers. Our estimates for IB fees indicate an 8.4% decline in 2023, but an increase of 11.7% in 2024.
Over the past six months, shares of GS have declined 8% compared with the industry’s fall of 12.2%.
Similar to Goldman Sachs, Wall Street firms, including Citigroup Inc. (C - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) , have been reducing the workforce in their IB division.
This month, in its latest round of staffing reductions, C will likely cut 30 IB jobs and 20 more in its corporate banking unit in London. The news was reported by Financial News.
Also, JPM is slashing about 40 IB dealmakers in North America as part of a global headcount reduction. The primary reason for this is the plunge in dealmaking activities across the industry, per Bloomberg News, reported last week.
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Goldman Sachs (GS) Fires 125 Managing Directors Globally
The Goldman Sachs Group, Inc. (GS - Free Report) is firing managing directors (MD) across the globe in response to the industry-wide plunge in deal-making activities, per a Bloomberg article that cited people familiar with the matter.
According to people familiar with the matter, who asked not to be identified as the cuts aren't public, the layoffs are currently in progress, which will affect nearly 125 MDs from several departments, including some investment banking (IB) positions.
Markedly, GS has undergone a minimum of three phases of job cuts within a year and these initiatives are part of the company's deep cost-savings drive.
Earlier this month, Goldman Sachs announced job cuts of more than 30 IB positions across the Asia region. During the first quarter of 2023, GS trimmed its headcount by 3,200, its biggest round of layoffs since the 2008 financial crisis. Last year, the company also cut about 500 jobs.
Global mergers and acquisitions and volumes for initial public offerings have been declining in the past few quarters. A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions, Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances died up. The bond issuance volume witnessed a decline too as investors turned pessimistic.
Amid theses, IB revenues declined in 2022 and the first quarter of 2023. Nonetheless, the same is likely to rebound in the near term as the company's robust client engagement, backed by digital disruption and transformation trends, and its decent investment banking backlog are positives. Therefore, these positives will likely give it an edge over its peers. Our estimates for IB fees indicate an 8.4% decline in 2023, but an increase of 11.7% in 2024.
Over the past six months, shares of GS have declined 8% compared with the industry’s fall of 12.2%.
Image Source: Zacks Investment Research
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar to Goldman Sachs, Wall Street firms, including Citigroup Inc. (C - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) , have been reducing the workforce in their IB division.
This month, in its latest round of staffing reductions, C will likely cut 30 IB jobs and 20 more in its corporate banking unit in London. The news was reported by Financial News.
Also, JPM is slashing about 40 IB dealmakers in North America as part of a global headcount reduction. The primary reason for this is the plunge in dealmaking activities across the industry, per Bloomberg News, reported last week.