Goldman making 'targeted' job cuts amid 'pretty difficult' Wall Street slump

Goldman Sachs (GS) Chief Operating Officer John Waldron said the company is now making a new round of “targeted” employee reductions, one of several Wall Street giants cutting jobs amid a dealmaking slump.

The cuts will amount to roughly 250 layoffs, said a person familiar with the matter, from a workforce of roughly 45,000. The eliminations follow a separate round of layoffs in January, when Goldman eliminated 3,200 workers, and additional layoffs last September.

Waldron, speaking at a conference in New York on Thursday, cited a “pretty difficult” environment for Wall Street as a reason for the cuts, which will help with a previously stated goal of reducing $600 million from payroll. Trading revenue for Goldman may fall 25% in the second quarter.

“We’re more cautious. We’re running the firm tighter,” he said.

Goldman’s stock fell 2.3% Thursday.

‘Preparing for a tougher environment’

Goldman is not the only Wall Street firm cutting back as deal-making dries up. The slowdown is largely due to a rapid rise in interest rates, economic uncertainty, and turmoil in the banking industry.

Most major banks that advise on mergers or IPO underwriting reported drops in fee revenue during the first quarter. The largest decrease of 26% belonged to Goldman Sachs (GS), followed by a 25% drop at Citigroup (C) and a 20% drop at Bank of America (BAC). JPMorgan Chase (JPM) saw investment banking revenue down 19%.

Many of these banks decided to eliminate more positions this year, according to media reports. Cuts at Morgan Stanley (MS) will amount to roughly 3,000, and JPMorgan is culling roughly 500 positions. Citigroup and Bank of America are making smaller reductions of a few hundred jobs each.

Goldman is planning for a total of $1 billion in expense cuts, including the new layoffs.

John Waldron, Goldman’s chief operating officer. REUTERS/Brendan McDermid

“We’re preparing for a tougher environment,” Waldron said Thursday. “We’d love to be surprised on the upside. We might be surprised on the upside. We can always flex into that but we definitely have a much more cautious tone.”

Waldron cited muted activity with private equity firms and less activity with larger companies while pointing to middle-market merger activity as a bright spot.

Trading “is more sluggish,” said Waldron who added that compared to the second quarter a year ago, Goldman’s market division should post 25% lower revenue. Morgan Stanley and JPMorgan executives have also warned recently that their trading results would decline in the second quarter.

“We’ve had a couple of good weeks of equity capital markets activity. So you could envision that we might have a better back half of the year. We’re not necessarily planning for that, but it certainly could happen,” Waldron added.

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