Preparing for what could be one of Goldman Sachs’ worst quarters since it went public 12 years ago, the Wall Street Bank is working on plans for deeper cost cuts that could see staff cuts of up to 1,700 to 3,000 people.
The bank had previously announced 1,000 job cuts, which equates to approximately 3% of its work force as part of its $1.2 billion cost-cutting initiative. Goldman Sachs will now be expanding this cost-cutting initiative by hundreds of millions of dollars because of crashing stock markets, the European debt crisis, an economic slowdown in the U.S and regulatory changes that are expected to crimp future profits.
The company’s third quarter closes on Friday and in preparation, Goldman has been revising its plans, potentially raising the cuts by as much as $250 million to $1.45 billion. In addition to the added layoffs, the firm is expected to reduce employee pay, much of which is handed out later in the year. It is also said to be sharpening its focus on noncompensation expenses, like real estate and travel.
Despite reports on the matter, executives warn that no final decision has been made on the size of the cuts, and that the numbers could change quickly if the market improved or weakened. It is possible that Goldman will address the matter when it releases its earnings on October 18.
The financial firm has reportedly left no expense overlooked, including downsizing the drinking cups in its New York headquarters to 10 ounces from 12 ounces, saving thousands of dollars. It has also gone mostly cashless in the cafeteria and other areas, eliminating the need to pay armored truck companies to haul away the money. Many companies are looking to drive down costs in a bid to protect profits so Goldman Sachs is certainly not alone. Barclays, which has said it plans to cut 3,000 jobs this year, recently sent a memo reminding employees that work-issued cellphones are to be used for “valid business purposes only.” Bank of America closed two-thirds of its 63 data centers and did not host an annual field day for its municipal bond department, a county club affair in New Jersey that in past years included sport stations outfitted with beer kegs.
Source: New York Times