Goldman Sachs Group Inc. will cut bonuses by about 40% in the deepest belt-tightening move among the big U.S. banks, The Wall Street Journal reported Thursday.
Goldman Sach’s
GS,
bonus reduction compares to expected 30% trims by J.P.Morgan Chase & Co.
JPM,
Bank of America Corp.
BAC,
Citigroup Inc.
C,
and Jefferies Financial Group Inc.
JEF,
according to the newspaper’s report, which cited people familiar with the banks.
Also Read: Goldman Sachs CEO expects layoffs in first half of January: report
The move comes after a tough year for Wall Street deal-making, with investment banking revenues falling sharply as bear market conditions hampered equity offerings, while high interest rates and inflation derailed mergers and acquisitions.
While banks benefitted from higher interest rates on loans, they also faced tighter lending conditions and public market volatility.
Goldman Sachs stock has lost 11.4% of its value in 2022, while JPMorgan Chase is down 16.4%. Both stocks are components of the 30-stock Dow Jones Industrial Average
DJIA,
which has retreated by 9.5% in 2022.
Morgan Stanley stock is down 14% while Citigroup has lost 26.1%. Wells Fargo & Co.
WFC,
is off by 14.3% and Bank of America is lower by 26.3%. Jefferies is down about 11.5% for the year.
Meanwhile, Bloomberg reported that Goldman CEO David Solomon plans to make job cuts in the first two weeks of 2023, according to his traditional year-end message to employees.
All of the big Wall Street banks have been adding personnel this year amid sustained strength in U.S. consumer spending.
With cuts announced in its mortgage unit, Wells Fargo was the only major U.S. bank to report lower head count at the end of the the third quarter.
Also Read: Morgan Stanley evaluating job cuts, CEO says
But Morgan Stanley CEO James Gorman said Oct. 17 on a call with analysts that the bank was studying job cuts.
Goldman CEO Solomon has been transparent about cost-cutting as well in recent statements.
Also Read: Goldman Sachs CEO says recession is likely, with 35% chance of a soft landing
A source familiar with the bank told MarketWatch earlier this month that Goldman was expecting to make up to an 8% job reduction.
While banker bonuses only represent a tiny slice of the income of overall U.S. work force, they play a role in the local economy in the New York area. Lower bonuses mean less demand second homes and other luxury goods, for example.