Goldman Sachs announced 608 employees were getting promoted to managing directors Thursday – but as hundreds celebrate their promotions, hundreds of others are getting quietly cut, sources told On The Money.
Unlike earlier this year – when mass layoffs nicknamed David’s Demolition Day for Goldman CEO David Solomon – made headlines, these firings are being described as “stealth layoffs” since they’re much smaller in scale and since the firm appears to be making every effort to keep them quiet.
One employee said the firm is being “mindful of morale” and wants to do everything possible to minimize the fear that layoffs typically bring to employees.
So far cuts seem to be concentrated on asset and wealth management and global markets with investment banking escaping largely unscathed, sources add. The firings include a range of employees — with everyone from associates to managing directors getting pink slips, sources add.
As On The Money previously reported, when the asset management and wealth management groups were joined last year, it created certain redundancies – like combining two marketing groups.
Over the last few months managers had been creating lists of roughly 440 potential employees in investment banking, trading, asset and wealth management, and operations who will be affected, according to a source briefed on the situation. Employees have been fretting about the possibility of cuts for just as long. The Post previously reported that employees stepped up attendance after Labor Day amid worries they could lose their jobs.
But it’s only been over the last week or so that leadership at the bank finally pulled the trigger.
At the same time, the bank has been making headlines for its new class of Managing Directors – it announces new MDs every other year and a new partner class in the off years. This class of MDs is 5% smaller than 643 bankers promoted in 2021 but larger than the 465 bankers promoted in 2019. Most of the promotions – 47% – are in the global banking and markets division.
Nearly a quarter of the promotions are in asset and wealth management and the rest of the promotions are sprinkled across the rest of the firm. While Goldman promoted a record number of women, the new class of black and hispanic employees dipped slightly.
In September, the bank had signaled it would be axing a small portion of its workforce as part of its annual culling process. The layoffs — which have been expected to target 1% of under-performers at the Wall Street giant — are the fourth round of cuts at the bank over the span of a year. While Goldman halted job cuts during COVID, the bank has made up for it by enacting multiple brutal rounds of layoffs this past year alone. In June, Goldman most recently axed 250 employees, including 125 managing directors.
But the move comes after another drop in earnings last month when Goldman Sachs saw profit plummet 33% in the third quarter as the bank faces ongoing losses from selling off chunks of its consumer lending business and worse than expected revenue from its asset and wealth management division. The bank has reported year-over-year profit declines for eight straight quarters.
Last month, CNBC reported banks including Goldman Sachs and Morgan Stanley have already reduced headcount by a combined 20,000 roles this year alone, based on an analysis of their quarterly filings — and that even more cuts could be on the horizon.
One of the key reasons for firings is that — unlike the last few years when people were moving from bank to bank — people are holding on to their jobs amid economic uncertainty.
“Attrition has been remarkably low, and that’s something that we’ve just got to work through,” former Morgan Stanley CEO James Gorman said last month.
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