Exclusive: Goldman to begin fresh round of job cuts

Mon Feb 25, 2013 3:56pm EST
 
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By Lauren Tara LaCapra and Katya Wachtel

(Reuters) - Goldman Sachs Group Inc will begin a fresh round of job cuts as early as this week, sources familiar with the matter said on Monday, with its equities-trading business bracing for bigger cuts than fixed-income trading.

The bank usually culls out the weakest 5 percent of its employees around now. But the cuts will likely be deeper in some businesses, particularly equities trading, where volumes and earnings are weak. The number of shares traded on major U.S. exchanges so far this year is down 7.2 percent.

Fixed-income trading at Goldman, which took big hits last year but has had better volumes this year, will likely see cuts of less than 5 percent, the sources said. It is unclear whether the cuts in totality will be larger than Goldman's typical 5 percent culling across the firm.

"As market activity has picked up in certain areas, we remain focused on prudently managing expenses and allocating resources to ensure we are best able to meet our clients' needs and generate good returns for our shareholders," said Goldman spokesman David Wells, who declined to comment on layoffs.

The cuts underscore how even as Wall Street shows some signs of recovering, banks are looking to thin their ranks to boost profitability.

Morgan Stanley, Bank of America Corp, Citigroup Inc, and UBS AG, have been cutting staff for the past few years, after revenue has been under pressure in multiple businesses. Regulations, meanwhile, are increasing banks' costs.

Over the past two years, Goldman has cut its workforce by 9 percent, or 3,300 employees.

Earlier this month, Goldman's new chief financial officer, Harvey Schwartz, said that laying off more workers may be the way for banks to generate higher returns on equity for shareholders. The measure is important because it shows how much profit banks can squeeze from their balance sheets.   Continued...

 
A Goldman Sachs sign is seen on the floor of the New York Stock Exchange in this April 16, 2012 file photo. REUTERS/Brendan McDermid/Files