Goldman Sachs Group Inc is pushing for even more stringent cost-cutting measures amidst an ongoing effort to reduce costs by $1 billion. During recent meetings, Goldman Sachs' managing directors received the directive to intensify the belt-tightening process, with the focus now shifting to smaller line items and potential job cuts. Previously, employees enjoyed certain expense privileges, such as website data subscriptions and business trips, but now such expenditures require senior manager approval, with travel now necessitating visits to multiple clients.
Job security within the company is now more precarious as layoffs loom on the horizon if revenues do not increase in alignment with the aggressive cost-cutting measures. Since September, Goldman Sachs has laid off around 3,700 employees. Managing directors are now assigned specific budget reduction goals and held accountable for achieving them. A spokesperson from Goldman Sachs reiterated the firm's focus on managing expenses and delivering on the promised $1 billion efficiency plan.
The escalated frugality comes as Goldman Sachs has grown increasingly pessimistic about economic recovery and dealmaking this year. Industry investment banking revenue is down almost 46% in Q2 compared to the same period last year, according to preliminary data from Dealogic. For Goldman Sachs specifically, investment banking revenue has dropped by 52%. Trading revenue, which reached its second-best year in 2022 at $25.67 billion, is also declining, while their venture into retail banking has been a public setback.
Goldman Sachs is gearing up for layoffs of nearly 250 people, including partners and managing directors at its most senior ranks. This follows Goldman's announcement in February that it plans to cut payroll expenses by $600 million, a target that the firm's president, John Waldron, has suggested may be exceeded by year's end. Despite the cuts aligning with trends at other institutions like Morgan Stanley and Citigroup, Goldman's recent layoffs have been the largest since 2008, affecting its valuation and leading to investor speculation about its strategic expansion in asset management.
