Abigail with attitude – Headcount alert: Goldman leads where others are sure to follow
A recent refrain of Abigail with Attitude columns has been that fixed costs are too high at the major investment banks. As Europe experiences a wet summer, the gloomy skies are complemented by a drip-feed of negative news about investment banking lay-offs. Barclays Capital, UBS and Credit Suisse are all rumoured to be reducing headcount. Normally, banks like to keep these dreary matters of black bin-liners beneath the radar screen.
I was therefore surprised to see a shrill headline in the FT in late July that trumpeted: “Goldman to cut 1,000 staff after disappointing drop in earnings.” The job losses represent 3% of Goldman Sachs’ total headcount.
Goldman’s second-quarter results were poor but the firm tends to spot the macro-trends before others. Goldman was one of the first investment banks to understand that the sub-prime mortgage party was over. Other banks will grasp the redundancy nettle if market conditions remain weak in the third quarter.