United States: Goldman Sachs CEO announces job cuts in wake of global economic slowdown in global economy.

As per reports, the bank is looking to lay off around 8% of its 49,000 employees, which could result in the loss of up to 4,000 jobs. Additionally, it is reportedly considering a cut of up to 40% of its bonus pool.

It comes as the City of London is preparing for a reduction in workforce, with thousands of positions expected to be eliminated. Teams working on mergers and acquisitions in the coming 12 months are particularly at risk as interest rates rise, raising the cost of borrowing the money needed for new deals after a banner year in 2022.

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Goldman Chief Executive David Solomon said in an annual recorded end-of-year message to employees that the partnership was preparing for slower economic growth as central banks raise interest rates, as first reported by Bloomberg News.

While discussions are still ongoing, Solomon said: "We are conducting a careful review and we expect to reduce our workforce in the first half of January."

2021 was a banner year for investment banks as businesses experienced a huge increase in mergers and acquisitions following the coronavirus pandemic lockdown. Goldman Sachs and other banks soared to take advantage, but a rise in global interest rates through 2022 reduced the number of lucrative deals.

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According to Solomon's message, "There are a number of factors affecting the business outlook, including tightening monetary conditions slowing economic activity." Our leadership team aims to prepare the company to meet these challenges.

Goldman still expects to post significant profits both this year and next. Analysts at S&P Global Market Intelligence forecast it would generate a net profit of $12 billion (£10 billion) in 2022 and $13 billion in 2023.

If it weren't for its record profit of $21 billion in 2021, it would be bigger than any year since the start of the global financial crisis in 2009. The bank has faced pressure to raise its stock market valuation, which is lower than some of its peers. Rival American investment banks such as Morgan Stanley. During 2022, its share price is expected to decrease by 14%.

If the job cuts end in the first two weeks of January, Goldman executives will be able to present them to investors on Jan. 17, when the bank will release its full-year 2022 results. Then, in February, Solomon is scheduled to address investors about a restructuring plan it announced in October to try to boost its profitability.

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The other significant restructuring under Solomon's four years of leadership will include scaling back efforts to enter consumer banking further under the Marcus brand and merging the two asset and wealth management divisions he previously spun off in 2019.

According to investment strategists at the bank, better business prospects may be closed for some time. As interest rates peak and economies around the world are past the worst of the anticipated recession, "there will be more volatility and downside during this bear market before tapering off later in 2023," he predicted.