Goldman annually culls the bottom tier of its workforce based on performance reviews, affecting everyone from clerical staff to its highest-ranking "partner-managing directors." The process clears the way for new hires and up-and-comers, the company says, but this year's culling is more aggressive.
"We're giving people a little less breathing space," said a person with knowledge of the current round of layoffs that began a few weeks ago and is expected to continue through early March.
Goldman, whose workforce in fiscal 2007 climbed 15% to just over 30,500, is likely to fire about 1,500 people, according to executives, former partners and executive recruiters. The company's fiscal year ended on November 30.
Goldman's layoffs would trail cuts already announced at competitors such as Lehman Brothers, Bear Stearns, Merrill Lynch and Morgan Stanley, although many of those occurred in areas such as residential mortgage lending in which Goldman has a minor presence. CNBC reported Thursday that Lehman is cutting 10% of its investment banking staff. A company spokesman declined comment.
Goldman is the biggest arranger of mergers and acquisitions on Wall Street, and much of its travails are centered on its $65.8bn (?4.4bn) portfolio of commitments to loans for leveraged buyouts.
The bank, which has already transferred many leveraged loan salespeople and traders to other parts of the bank, for years complained it couldn't compete with big commercial banks such as Citigroup and JP Morgan Chase that used their monster balance sheets and borrowing rights at the Federal Reserve to capture plum corporate advisory assignments in return for financing M&A transactions. That, however, has changed, and is coming back to haunt Goldman and other investment banks.
Lloyd Blankfein, chief executive of Goldman, said at a Merrill Lynch conference in November: "Who would doubt at this point that Goldman Sachs could finance the biggest takeover, the biggest M&A transaction? We wouldn't have written down so much money in the last quarter if we didn't have that capability, because we certainly have those (loan) commitments."
Goldman wrote down $1.7bn on its loan commitments in last year's third quarter
The company also is captive to its $2.3bn investment in Industrial & Commercial Bank of China and its even larger stake in Japan's Sumitomo Mitsui Financial Group. While it sometimes books hefty quarterly profits from the investments, shares of ICBC have fallen about 15% in Goldman's first fiscal quarter that ends next week while Sumitomo is off 20%.
Goldman, the biggest US investment bank with a market value of $69.9bn, also has a huge private equity portfolio that it must mark to market each quarter. It is expected to record a loss of $800m to $1bn in the portfolio this quarter, said a person with knowledge of the investments.
Analysts in recent weeks have been making deep cuts in their forecasts for investment banks' first quarter to reflect the deepening credit crisis deepens, and Goldman has been in the forefront.
Goldman's stock is reflecting the issues. Its profits soared 25% in fiscal 2007 to a new record and its stock price rose 16.3% while rivals such as Bear Stearns, Merrill Lynch and Morgan Stanley were battling mortgage-related problems (and each reported fourth-quarter losses). This year, Goldman is vying with Morgan Stanley as the worst-performing large brokerage stock, with shares of each down about 18%.
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发表于 2008-2-23 15:31:00
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