Goldman Sachs is thinning its ranks. Again.
The bulge bracket firm is once again trimming underperforming staff, about 5 percent, with the job losses expected soon, according to a party familiar with Goldman’s thinking.
“These cuts are not across the entire firm and (are) usually done this time of year,” the party said.
According to the firm’s 2012 annual report, the broker has 32,600 employees so a 5 percent head count reduction equates to approximately 1,630 fresh job cuts.
The party did not comment on what departments would see the cuts. However, the reductions are in line with Wall Street’s overall slimming, especially in the equities sector where commissions and trading volumes have been lower in the last few years.
Reuters reported Monday evening that equities traders will be hit harder than fixed income traders.
In its latest report, Tabb Group analysts wrote that after three straight years of falling commission levels things should rebound in 2013. However, total dollar amount of commissions is expected to be lower at $13.7 billion than in its heyday of 2009 ($17.3 billion). That is up versus 2012 when total commissions were $12.7 billion.
In 2012, commissions were down 8 percent versus 2011, 2011’s off 6 percent when compared to 2010 and 12 percent lower in 2010 when viewed against 2009’s level.
Equities trading revenues declined 7.1 percent in 2012 for five big investment banks, even though overall daily volume on U.S. markets fell 18.5, according to financial reports released last week. Revenue for the five fell to $21.8 billion from $23.4 billion in 2012, based on their financial reports for the fourth quarter and full year.
The big three investment banks, Bank of America Merrill Lynch, Morgan Stanley and Goldman Sachs, reported an average decline in revenue of 11 percent for their institutional equity trading businesses for the year ending Dec. 31, 2012.
The nine largest global investment banks — Deutsche Bank AG, Barclays Plc, JPMorgan Chase & Co., Bank of America Corp., Citigroup, UBS AG, Credit Suisse Group AG, Goldman Sachs Group Inc. and Morgan Stanley — announced more than 30,000 job cuts in the first nine months of the year, according to data compiled by Bloomberg.
Goldman reported a 45 percent jump in revenues for its equities client execution business in the fourth quarter of 2012 compared to the year-earlier period. Revenues grew from $526 million in 2011 to $764 million in 2012. The increase reflected significantly higher net revenues in derivatives and higher net revenues in reinsurance, the company said.
However, these increases were partially offset by a 7.7 percent drop in commissions and fees, reflecting lower equity market volumes, the company said. Revenues from equities and commissions and fees dropped from $782 million in the last quarter of 2011 to $722 million in the last quarter of 2012.
In 2012, Goldman Sachs’ compensation ratio was at 37.9 percent. This is down from 42.4 percent the previous year.
