NEW YORK, Dec. 16 (Reuters) – Goldman Sachs Group Inc (GS.N) plans to lay off thousands of employees to navigate a tough economic environment, a source familiar with the matter said.

The layoffs are the latest sign that Wall Street austerity is accelerating as deal-making dries up. Investment banking revenues have fallen this year due to a slowdown in mergers and stock offerings, marking a marked turnaround from a 2021 blockbuster when bankers received large pay raises.

Goldman Sachs had 49,100 employees at the end of the third quarter, following a significant headcount during the pandemic. The workforce will remain above pre-pandemic levels, the source said. According to a filing, the workforce at the end of 2019 was 38,300.

The bank is considering a significant reduction in its annual bonus pool this year, according to a separate source familiar with the matter. That equates to increases of 40% to 50% for top-performing investment bankers in 2021, Reuters reported in January, citing those with direct knowledge of the matter.

“GS needs to demonstrate that costs are as variable as revenues, especially after a year in which it offered top executives special rewards during boom times,” wrote Mike Mayo, banking analyst at Wells Fargo.

“Goldman Sachs now needs to show that it can do the same when things don’t go so well and live up to the old Wall St. adage of ‘eating what they kill,'” he said in a note.

CONSUMER BANK FIGHTS

According to one source, the latest plan would require hundreds of employees to be cut from Goldman’s consumer business.

The bank indicated in October that it would scale back its ambitions for Marcus, the loss-making consumer branch. Goldman also plans to stop providing unsecured consumer loans, a source familiar with the move told Reuters earlier this week, another sign it is pulling out of the company.

Chief Executive Officer David Solomon, who took over in 2018, has been working with Marcus to diversify the company’s business. It was placed under the wealth division in October as part of a management realignment that also merged the trading and investment banking divisions.

Trade and investment banking — Goldman’s traditional earnings drivers — accounted for nearly 65% ​​of revenue at the end of the third quarter, compared to 59% in the third quarter of 2018, when Solomon took the top job.

Semafor reported earlier on Friday that Goldman will lay off up to 4,000 people as the Wall Street bank struggles to meet profit targets, citing people familiar with the matter.

Goldman Sachs declined to comment.

The latest job cut plans come after Goldman laid off about 500 workers in September after pausing annual practice for two years during the pandemic, a source familiar with the matter told Reuters at the time.

The investment bank had first warned in July that it would delay hiring and cut costs.

Global banks, including Morgan Stanley (MS.N) and Citigroup Inc (CN), have been cutting back on staff in recent months as a boom in deals on Wall Street ebbed due to high interest rates, tensions between the United States and China, the war between Russia and Ukraine, and rising inflation.

Reporting by Saeed Azhar and Lananh Nguyen; Additional reporting by Noor Zainab Hussain and Mehnaz Yasmin in Bengaluru; Edited by Mark Porter

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