Goldman Sachs will have fired up to 2,000 staff this financial year in reaction to the sharp downturn in financial markets and investment banking activity. It is understood to have got rid of 850 staff between the end of August and the end of November alone.
The firm has said since its first quarter results that it plans to see a 'roughly flat' headcount over the course of 2001 in an attempt to bring costs into line with revenues.
At the end of Goldman's third quarter in August it had a headcount of 23,494, a 26% increase on the previous year. To bring its headcount in line with the 22,627 at the end of 2000, it will have to have laid off 867 staff by this week, the end of Goldman's fiscal year. Last week, Merrill Lynch's securities research team highlighted the number of cuts that still need to be made to meet Goldman's targets. The research report said that cuts of 1,000 or more staff would not be surprising.
Goldman played down the size of the numbers, stressing that David Viniar, chief financial officer, had always said the headcount would be flat for the year. The cuts in the past few months come on top of an aggressive performance review at the beginning of the year that trimmed Goldman's workforce by 5%, or about 1,100 staff. This brings the number of staff laid off over the year to about 2,000, or nearly 9% of its workforce. Over the same period, Goldman's quarterly profits have fallen by 43%.
Goldman insisted that it had no plans to reduce staff in the immediate future once the latest round is completed. Many other investment banks have seen a net reduction in headcount this year, with far higher percentages of overall staff being made redundant. Over the year, Goldman has hired as many people as it has fired, although some 500 of these came from its summer intake of graduates and MBA students.
The big test for Goldman will come in a few weeks' time when it unveils its fourth-quarter results to the end of November. The quarter started with the immediate aftermath of the September 11 attacks, which were followed by six weeks of minimal activity. One analyst warned that profits could come in at slightly above $300m (€342m) - about one-third of the level at the peak of the technology boom.