Goldman Sachs (GS) bankers might be upset about getting fewer company-sponsored hotel stays, flights, lunches and entertainment in coming months—but that’s just the tip of the iceberg.
The New York-based investment banking giant is undergoing its most extensive cost-cutting push in years, according to people familiar with the matter speaking to Bloomberg. Goldman Sachs is expected to dismiss more support staff such as tech workers and reject spendings such as entertainment and hotel stays unless it’s directly necessary for serving a client.
The news comes at a time when the financial industry at large has struggled with losses associated with risky loans in the energy sector, market volatility, and stiffer regulation. Many Wall Street’s banks including J.P. Morgan and Citigroup (C) have slashed parts of their workforce to lower expenses.
And no cut is too small.
The bank may also choose not to fill open positions, defer projects, and dial back spendings on pitch books and brochures. The cuts will likely be upwards of $1 billion—the highest cost reduction by the bank since 2011, perhaps even further back. Goldman posted expenses of $25 billion for fiscal year 2015 on revenue of $33 billion, though the bank has posted revenue above $34 billion in the two years prior with expenses below $23 billion.
Goldman, headed by CEO Lloyd Blankfein, is already expected to report steep cuts in expenses in its first quarter earnings on Tuesday. The bank has already moved about 25% of its jobs to lower cost cities including Bengaluru, Salt Lake City, Dallas, and Singapore. And like most banks on Wall Street, Goldman has also shifted hiring to younger, lower-cost, workers.
The bank also announced plans in March to cut over 5% of its fixed-income division mid-March, though the bank is known to cut about 5% of its lowest performing workforce during the period to make way for new hires.