Goldman Sachs is cutting about 5% of sales and trading staff after senior equities leaders delivered a tough town hall talk (GS)

David Solomon

  • Goldman Sachs is cutting about 5% of the people in its sales
    and trading division, according to a person with knowledge of the
    matter. 
  • Each year, Goldman culls underperformers across the company,
    with the percentage dependent on the performance of the business
    and future growth prospects. 
  • At an equities town hall on Monday before the cuts were
    announced, a top equities exec told staff that he’d have zero
    tolerance for them if they didn’t buy into the culture of renewed
    collaboration that new CEO David Solomon is trying to
    instill. 

Goldman Sachs is in the process of cutting roughly 5% of its
sales and trading staff as new CEO David Solomon conducts a review
of the business and looks for ways to improve collaboration between
the divisions. 

The company notified staff in the securities division of the
cuts this week, including those employees who deal with clients
trading stocks, bonds, and currencies, according to a person with
knowledge of the matter.

Staff in commodities were told earlier this month. Bloomberg
reported that at least 10 commodities employees had been
fired. 

Each year Goldman Sachs culls its underperforming staff to make
way for new recruits and lateral hires. While the percentage each
year can vary — the bank cut 10% of fixed-income staff several
years ago — the target is generally 5%. Certain businesses within
sales and trading likely suffered bigger or smaller cuts. 

At an equities town hall on Monday before the cuts were
announced, Jeff Nedelman, one of four execs running the business,
spoke directly and frankly with those gathered.

Nedelman, according to a person who heard his remarks, said
there won’t be any tolerance for a lack of cooperation or
coordination with the firm. Nedelman mentioned the companywide
philosophy “One Goldman Sachs,” coined by Solomon to foster better
collaboration, the person said. 

Also on Thursday, Goldman announced the dismissal of 65 people
in a
filing
with New York state labor officials. Those employees
have already been informed, meaning this week’s layoffs will likely
show up in future filings. 

Within the securities division, the equities business has
suffered some recent high-profile departures. Jack Johnston, a
top-performing salesman with large hedge-fund clients, left for
rival JPMorgan Chase, people familiar
with the matter told Business Insider
. Johnston will cohead the
US equity sales and trading business at JPMorgan, the people
said.

It’s the second senior defection in Goldman’s equities division
in the past week. Danielle Johnson, a managing director in the
bank’s client-relationship management group, was poached by Credit
Suisse to co-run its Americas equities business, Bloomberg reported
last Friday.

Goldman Sachs’ equities business was ranked number one for years
before giving way to Morgan Stanley after the financial crisis. And
JPMorgan has been heavily investing in the business in recent
years, poaching from Goldman and increasing competition among the
three. 

Goldman Sachs reported $7.6 billion in equities revenues in
2018, a 15% increase from 2017. JPMorgan reported $6.9 billion, a
21% uptick from 2017, while Morgan Stanley pulled in $9 billion, a
12% increase. 


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Goldman Sachs is cutting about 5% of sales and trading staff after senior equities leaders delivered a tough town hall talk (GS)