Goldman Sachs is looking at reinstating year-end job cuts as economic outlook dims

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Goldman Sachs has slowed its hiring and is looking to cut the fees that it pays vendors as the investment bank prepares for tougher times ahead.

But New York-based Goldman has another tool in its arsenal to keep expenses under control: A potential return of year-end job cuts, according to a person with knowledge of the situation.

Wall Street firms have long culled those deemed to be underperformers, often at the end of the year as the companies prepare to dole out bonuses to those who remain. That annual exercise was paused during the pandemic as banks furiously hired to take advantage of a record boom in deals activity.

At Goldman, for instance, headcount swelled by 15% to 47,000 employees in the past year alone, according to figures disclosed Monday. Some of those workers may have come aboard via acquisition, but that is still a large increase.

Now, amid a steep decline in revenue tied to debt and equity issuance, Wall Street's leading investment bank is considering a return to the year-end ritual.

CFO Denis Coleman told analysts Monday on a conference call to review second-quarter earnings that the firm will slow hiring to replace those who leave and will «probably» reinstate annual performance reviews by year end.

That is «something that we suspended during the period of the pandemic for the most part,» he said.

No target exists yet for headcount reduction, according to the person, and the plans are dynamic and could change. In the past, managing directors and partners were asked to come up with lists of those they could release if needed.

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