Weekly 10-Q: Layoffs and shrinking bonuses — what is Goldman Sachs up to?
- Goldman is weighing plans to terminate around 400 employees from its consumer business operations and reduce the bonus pool for investment bankers by as much as 40%.
- And, the SEC votes on proposals to introduce potential changes that include new rules to regulate the US equity market structure.
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Last week we covered: Wells Fargo makes headway in delivering digital solutions with 'Vantage'
Layoffs and shrinking bonuses — what is Goldman Sachs up to?
After slashing 500 jobs in September this year, Goldman Sachs is furthering plans to terminate at least 400 employees from its consumer business operations and halt personal loans through its loss-generating retail banking wing, Marcus.
As part of the bank's reorganization strategy owing to Marcus' underperformance, the consumer-focused business was moved under the bank’s asset and wealth management division in October.
Additionally, the bank is bringing back its policy of reviewing and ranking the annual performance of its employees to further asses the layoff decisions.
The move comes as CEO David Solomon adjusts the bank's strategy while it prepares for an extended period of economic challenges heading into 2023.
High interest rates and red-hot inflation have hit Wall Street as the dealmaking boom has ebbed away, resulting in other major banks – including Morgan Stanley and Citigroup – reducing their headcounts in recent months as well.
Additionally, as Goldman seeks to minimize expenses amid revenue pressures, the bank is also weighing plans to reduce the bonus pool for approximately 3,000 investment bankers by as much as 40% this year.
This is estimated to be the largest cut since the 2008 financial crisis as well as the highest among the bank's peers – JPMorgan Chase, Citigroup, and Bank of America – which intend to implement a 30% cut each.
Analysts predict Goldman's revenue will fall more than 40% compared to last year. Meanwhile, investment banking fees have dropped by 35% this year across the sector, according to analysts at Refinitiv.
Top stories of the week
BNY Mellon rewards stocks to 90% of employees
BNY Mellon will reward 10 shares of its stock to its eligible rank-and-file employees that the bank will put into Fidelity stock, starting in February 2023. The move intends to include the bank's workforce -- consisting of roughly 51,000 employees -- in the bank's commercial success at a time of economic uncertainty and when rivals are slashing headcounts. (Reuters)
Citi CEO allows employees to work from anywhere for the next two weeks
Citi CEO Jane Fraser has permitted employees in hybrid roles to work from anywhere for the remaining two weeks of the year -- provided they stay in their country of employment. Fraser's strategies don't seem to follow the norms of Wall Street culture. The flexibility is aimed at modernizing banking culture and keeping pace with the changing times. (Bloomberg)
FIS implements new board leadership and commences strategic review
Jeffrey A. Goldstein has been appointed as the independent chairman of the board of directors at FIS. Stephanie L. Ferris is the new CEO -- and Gary A. Norcross, the current CEO and chairman of the board of directors will depart from the company and the board. In addition to these new leadership changes, FIS has adopted an independent board chair structure. Ferris and the board have initiated an extensive evaluation of the company’s strategy, businesses, operations, and structure aimed at driving better results, boosting shareholder value, and amplifying client services. (Yahoo Finance)
HSBC, Extend to enable virtual cards for US SMBs
HSBC and virtual card and spend management platform Extend have forged a partnership -- through which HSBC will provide Extend solutions to its commercial card clients in the US to help companies manage their spending with the flexibility and control of virtual cards. Using their HSBC business cards, mutual customers will be able to save time and streamline processes – like closing the books at the end of the month – and allowing others to make business payments in real-time. Additional features will be added to the offering by 2023. (Crowdfund Insider)
JPMorgan partners with Trovata to boost corporate investments
JPMorgan Asset Management has tapped into Trovata's cash management platform to provide forecasting, reporting, and analysis for its corporate clients -- to help them invest excess cash and bring in higher yields amid rising interest rates. The partnership enables the companies’ mutual customers to determine their liquidity needs, transact across their global portfolio in real time and compare funds across different managers, currencies, durations, and settlement options. All this can be done in one place because the investment balances and transactions from Morgan Money – the bank's corporate investing and trading platform – will flow into Trovata. (American Banker)
SEC to vote on proposals that could overhaul US equity market structure
A US Securities and Exchange Commission meeting was held on December 14, to vote on whether to adopt some of the significant changes to the American stock market in nearly two decades. The potential changes include new rules that would require marketable retail stock orders to be sent to auctions before they are executed, a new requirement for brokers to prove they get the best possible executions for client orders, and lower trading increments and access fees on exchanges. The move comes from SEC Chair Gary Gensler to drive greater competition, transparency, and efficiency in the marketplace. (FT)
SoFi is rolling out a new BNPL product for eligible members
SoFi is rolling out early access to a new Pay in 4 option for select customers over the coming weeks. The program within which SoFi is launching the BNPL option — Mastercard Installments — enables banks, lenders, fintechs, and wallets to offer BNPL experiences at checkout. The new offering lets members split a purchase of between $50 and $500 into four interest-free payments. It can be used both in-store and online within the US. The feature supports only hefty purchases like flights, hotels, electronics, clothing, home improvement, and other retailers. The eligibility criteria of consumers will hinge on members maintaining a qualifying direct deposit, passing a soft credit check, and meeting risk requirements. (PYMNTS)
Tweet of the week
Chart of the week
The second half of 2022 has shown much more promise, with many public companies bouncing back
- Walmart intends to offer BNPL loans in 2023 (Reuters)
- Jack Henry and Glia partner to accelerate digital customer service (The Paypers)
- A look into how Chase, BofA, and Citibank accelerated their digital transformation (The Financial Brand)