Speaker 1: Okay, let's get to our next guest, and we're looking
Speaker 1: into Goldman Sacks as it prepares for its biggest random
Speaker 1: layoffs since the start of the pandemic. Discuss all this
Speaker 1: is Sally Bakewell Bloom Big US finance team leader, Sally,
Speaker 1: thank you some of joining us that that is this
Speaker 1: really reflective of the wider industry and in banking and
Speaker 1: investment banking or is it company specific? I think it
Speaker 1: is a little bit reflective. So before the pandemic UM,
Speaker 1: a lot of banks typically did have this kind of
Speaker 1: annual cull when they would usually get rid of something
Speaker 1: in the region of two to five percent of their
Speaker 1: bottom performers UM. Now, because of the pandemic, they put
Speaker 1: that on hold UM and gradually have started to do
Speaker 1: it again. And now we understand we learned that Goldman
Speaker 1: Sachs is planning to to let go of about several
Speaker 1: hundred of its staff UM starting from this month. And
Speaker 1: we can expect you know that the other investment banks
Speaker 1: they faced similar to challenges they're battling inflation UM. They
Speaker 1: have also seen a slump in dealmaking in investment banking.
Speaker 1: And we understand that a lot of the cut cuts
Speaker 1: with Goldman Sex were in that division, and so we
Speaker 1: can expect that this sets the tone a little bit
Speaker 1: for broader Wall Street and that we we might start
Speaker 1: to see other banks following suit. No doubt though, there's
Speaker 1: a lot of pressure to raise the salaries of key performers,
Speaker 1: big producers. So are we hearing much about the overall
Speaker 1: strategies that to sort of hold the line, because you know,
Speaker 1: if you're letting three people go and then you're hiring
Speaker 1: somewhere else and also raising salaries, you might just tew
Speaker 1: the line. Yeah, that's right, And in fact we we
Speaker 1: sort of have that dilemma played out in the comments
Speaker 1: from the HSBC CFO today where they say they will
Speaker 1: probably have to you know, materially raise pay for their
Speaker 1: employees next year UM and that in order to kind
Speaker 1: of battle inflation, which for a bank with two hundred
Speaker 1: and twenty people, it's one of its um you know,
Speaker 1: it has very very significant UM inflation related issues. It
Speaker 1: may have to some undertake some pretty brutal cuts. I mean,
Speaker 1: I think that any you think about that two thousand,
Speaker 1: if you look at the number of people that work,
Speaker 1: for instance, say at PayPal, you know you wonder whether
Speaker 1: HSBC over the next many many years will cut headcount
Speaker 1: just because it has to. Well, I mean, we're probably
Speaker 1: not quite seeing the magnitude that we've seen in this
Speaker 1: sort of tech space yet where you know, um, a
Speaker 1: lot of the company is not speaking of papal here,
Speaker 1: but they've faced, you know, a sort of crisis of
Speaker 1: investment confidence, and so they've had to and they're facing
Speaker 1: all kinds of challenges and they they've had to make
Speaker 1: these huge sweeping cuts. UM. I don't think we're we're
Speaker 1: going to see that with the US investment banks yet.
Speaker 1: I think there, if anything, they'll probably be a bit
Speaker 1: more targeted in some of their teams. Goldman, you know,
Speaker 1: we perhaps could have expected a few more to be cut.
Speaker 1: They telegraphed in July that they were slowing their hiring
Speaker 1: velocity amid a challenging operating environment. So this number several
Speaker 1: hundred doesn't feel like such a significant number. Of course,
Speaker 1: it may transpire to be to be more um. But
Speaker 1: you know, the banks, they are facing this sort of
Speaker 1: inflation re challenge. We've already seen them start to trim
Speaker 1: um a lot of their mortgage related bankers um and
Speaker 1: so we can definitely expect to see more. However, I
Speaker 1: mean that said you know, Citi CEO Jane Fraser, she
Speaker 1: did rule out investment banking cuts UM and you know,
Speaker 1: so it might not be that we see these huge
Speaker 1: swathes and a bit more kind of trimming around the
Speaker 1: edges in places, Sally. The thing is that the banking
Speaker 1: has changed. It has a lot more competition from the
Speaker 1: new economy now than it used to, and that has
Speaker 1: of course changed the landscape because in the old days
Speaker 1: the banks used to routinely over fire, then over higher
Speaker 1: and just carry on with that sort of that vicious circle,
Speaker 1: if you will, right, And it's kind of interesting now.
Speaker 1: I mean just looking at JP Morgan UM for example,
Speaker 1: it's just purchased a company, a kind of fintech payments firm, renovatee.
Speaker 1: Uh so, you know, in its quest to try and
Speaker 1: compete with technology in you know, in the new economy
Speaker 1: online banking with apps UM with sort of the payment
Speaker 1: apps that enable you to do these very quick transfers UM.
Speaker 1: So it will of course probably be acquiring people in
Speaker 1: that move UM and Goldman Sex. You know, while um
Speaker 1: it it's headcount is about forty seven thousand UM two
Speaker 1: years ago it was a little bit less than that,
Speaker 1: so it's actually been adding people UM as they have
Speaker 1: also been quite aquisitive to UM. So yeah, the banking
Speaker 1: landscape now is of course very different, and they're trying
Speaker 1: to compete with sort of the fintech space, but that
Speaker 1: involves acquisition, which Bruce Head count UM just as much.
Speaker 1: I was a little surprised to see the stark price
Speaker 1: performance of hs spec actually up two point one in
Speaker 1: London and uh, well it didn't trade yesterday because har
Speaker 1: Kom Marca was closed. But with those comments by by
Speaker 1: you and Stevenson and and nol Quinn about being being
Speaker 1: short on their cost cuts by half a billion, that's
Speaker 1: a lot of money. Yeah, and I think they also
Speaker 1: said that they planned to hit their two percent cost
Speaker 1: target UM and so with costs in focus so much,
Speaker 1: I think if that's what they're telegraphing, that's probably why
Speaker 1: the UM share price didn't, you know, didn't take a
Speaker 1: massive massive hit and actually ticked up a little bit
Speaker 1: UM And you know, if this is their way to
Speaker 1: try and you know, I maybe investors are glad to
Speaker 1: see that the bank is going to really keep a
Speaker 1: lit on costs because that's the thing that they do
Speaker 1: care about a lot. You know, JP Morgan for all
Speaker 1: of its positive results, it took black and shareholders for
Speaker 1: not keeping it on expenses. Yeah, excellent stuff, Sally, Thank you.
Speaker 1: Sally Bakewell, Bloomberg US Finance team leader with US live
Speaker 1: here