By Sridhar Natarajan and Michelle F. Davis
Goldman Sachs Group Inc. resumes job cuts as the coronavirus pandemic survives the financial industry’s resolve to provide stability to nervous employees during the economic downturn.
The company is embarking on a plan to cut around 1% of its workforce, or around 400 jobs, according to people familiar with the matter, who asked not to be identified because the information is not public. The move comes as the company’s core trading and trading activities are booming.
Persistent epidemics in the United States are forcing the nation’s largest banks to reconsider their plans to wait until the unrest is over, as initially hoped. Wells Fargo & Co. and Citigroup Inc. were among the first to restart cuts after their stock prices fell and faced the prospect of loan downgrades. Even JPMorgan Chase & Co. is joining the fray with a new round of cuts.
“At the onset of the pandemic, the company announced it would suspend all job cuts,” said Pat Scanlan, spokesperson for New York-based Goldman Sachs. “The company made the decision to go ahead with a modest number of layoffs.”
At JPMorgan, America’s most profitable bank, executives have launched hundreds of new cuts, including around 80 jobs in the consumer unit and dozens more in other lines of business, according to a person briefed on the changes. . A spokesperson confirmed that the cuts were part of a resource review the company conducts each year. The bank had more than 256,000 employees at the end of June.
Financial firms around the world, including HSBC Holdings Plc, have continued their cuts initially delayed by the pandemic. The insurer Allstate Corp. on Wednesday announced a restructuring that resulted in 3,800 job cuts, and chief executive Tom Wilson said the company had waited for signs of improving the economy.
Like some rivals, Goldman has pledged to refrain from sweeping layoffs as the pandemic hit communities across the United States earlier this year and wreaked havoc on the economy. But the firm did not specify how long the moratorium would last. CEO David Solomon signaled the need for cuts in an interview in June, saying he ran a company and that “we will do what is right for our shareholders.” He noted that the company’s typical annual slaughter will have to resume before 2021 and beyond.
The cuts could be the start of larger cuts in the coming months as the bank determines how to proceed in the current environment to meet a goal set in January to eliminate $ 1 billion in costs.
Most of the cuts in the current cycle relate to back office roles that had been consolidated into larger lucrative divisions as part of an earlier reorganization, one of the people said. Insiders at the time indicated that this would give division heads greater control over costs and likely lead to the elimination of roles.