Goldman Sachs cuts 12 percent of staff

NEW YORK -- Leading investment bank Goldman Sachs Group Inc. is axing 12 percent of its investment bankers, according to a report.

Goldman will cut nearly 150 high-level employees worldwide, The Wall Street Journal said Wednesday.

The cuts will include some of its big guns, including managing directors and partners. Some lower-ranked associates and vice presidents will also be let go, the paper said, quoting unnamed sources.

Though the company is eliminating seasoned financiers, the cuts affect only its 1,200 or so investment bankers.

It started the year with 23,000 employees and has stated headcount will be flat by the end of the year. A Goldman Sachs spokesman said that this is still the plan.

The New York-based bank otherwise declined to comment on the report.

Top IPO underwriter seeing slump

Goldman's fortunes are inexorably linked to the health of the stock market. It is the leading underwriter of initial public offerings worldwide.

It is also the latest of a string of investment banks to trim its ranks. It has drawn up contingency plans to take more drastic job cuts if the market slowdown worsens.

Despite the U.S. markets' recent rally, business has not been good in the high-end investment banking business that Goldman thrives on. Mergers and acquisitions and IPOs provide the best margins. Business has yet to return.

Morgan Stanley, Merrill Lynch, Charles Schwab and Salomon Smith Barney, part of Citigroup, have all trimmed their staff since the market hit the doldrums last year.

Goldman Sachs posted record net income for 2000, of $3.25 billion. But its profits are down 13 percent year-over-year for the first quarter.

Total initial public offerings for the industry are down by 67 percent this year. Goldman's IPO fees are down more than half.

Many investment banks lay off workers who don't perform. Turnover on Wall Street can also be high if bankers' aren't satisfied with bonuses.

Goldman went public in 1999, partly to use its stock as currency to retain workers. It typically gets rid of 5 percent of its workers through reviews in a year.

But Goldman is now trimming its ranks quietly to avoid mass layoffs. It will achieve its cuts through tougher reviews and attrition, the Journal said.

It has also switched investment bankers into areas where business hasn't slowed. Employees are also taking pay cuts to trim costs.

Goldman got rid of 1,000 jobs in 1994, which left it exposed when the market bounced back.

Goldman Sachs

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