What signal is being transmitted?, International investment banks experience concentrated layoffs year-on-year | Goldman Sachs Group | International
Due to enormous operational pressure, the international investment bank Goldman Sachs Group is considering a new round of layoffs.
It is reported that Goldman Sachs plans to lay off nearly 250 employees across the group, targeting senior positions including the CEO. The specific time for layoffs has not been determined yet, but it may take place in the coming weeks.
Last September, Goldman Sachs laid off hundreds of employees as part of its regular staffing management. In January of this year, Goldman Sachs further reduced about 3200 employees, accounting for approximately 6.5% of the total number of employees. This will be Goldman Sachs' third round of layoffs in less than a year.
As is well known, the 2022 US stock IPO market will usher in the coldest winter. According to statistics, there were a total of 345 newly listed companies in the US stock market in 2022, only a quarter of the number in 2021. The sharp decline in the number directly led to a cliff like decline in revenue for the investment industry. Many investment bankers hope that the situation will improve this year, but this is not the case. According to data released by US financial data provider Dirokee, as of March 30th, the global M&A volume in the first quarter of this year was $575.1 billion, a decrease of 48%, compared to $1.1 trillion in the same period last year. The transaction volume of US mergers and acquisitions decreased by 44% to $282.7 billion.
This year, due to the bleak global primary market, the "trading drought" has affected the profits of investment banks, with Goldman Sachs Group, which focuses on investment banking business, being a typical example. The financial report released by Goldman Sachs recently showed that in the first quarter of this year, Goldman Sachs Group's net profit decreased by 19% year-on-year, and investment banking revenue decreased by 26% year-on-year, surpassing the decline of JPMorgan Chase and Citigroup. In addition, Goldman Sachs is expected to see a year-on-year decrease of over 25% in earnings from stock and fixed income trading in the second quarter. Brian Hoffrat, co head of Goldman Sachs Group's Americas M&A division, previously stated that market volatility is clearly a challenge for Goldman Sachs and has had an impact on trading volume in the first quarter.
The rise in interest rates, global economic turmoil, and recent banking crises in the US and Europe have weakened the trading ability of many companies. Since the beginning of this year, corporate merger and acquisition activities have sharply slowed down. In addition to Goldman Sachs, several international investment banks have also announced layoff plans to save expenses and reduce costs.
JPMorgan Chase recently announced that it will lay off approximately 500 employees across the entire bank, with personnel mainly focused on technology and operations, involving major departments of JPMorgan Chase, including retail and commercial banking, asset and wealth management, as well as corporate and investment banking. In early May, Morgan Stanley also announced plans to lay off approximately 3000 employees in the second quarter of this year, equivalent to 5% of the global workforce, excluding the wealth management department. If the layoff plan is implemented, it will be Morgan Stanley's second round of layoffs in just six months.
The concentrated layoffs by international investment banks may indicate that the downward pressure on the economy is continuing to increase, and there may be more and more uncertain factors in the future.