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600 jobs axed at Goldman Sachs
Jonathan Prynn, Consumer Affairs Editor23.10.08
INVESTMENT bank Goldman Sachs is sacking 600 staff in London because of the world financial crisis.
The legendary Wall Street giant is getting rid of 10 per cent of its global workforce of 32,500. The axe will fall heavily on its London headquarters in Fleet Street, where around 6,000 are employed. The bank would not comment on the job cuts today but they are understood to be coming from all levels and departments.
Top bankers at Goldmans can earn £5million or more in a good year but the axe is more likely to fall on less successful employees earning hundreds of thousands, rather than millions.
It is the latest and one of the most dramatic job culls in the City since the start of the credit crunch. Unlike previous victims of the credit crunch, Bear Stearns and the collapsed Lehman Brothers, Goldmans has enjoyed a reputation as the world's strongest investment bank. However, it is now suffering from the downturn in lucrative corporate finance fees and trading. In New York, trading has fallen by 50 per cent this year.
It came on another turbulent day for the world's financial markets with the FTSE-100 tumbling 106.43 points, or 2.6 per cent to 3934.46.
The slump followed heavy selling in Asia this morning where stock markets in Japan and Hong Kong were hammered on fears of a global recession.
There are also growing fears that a number of countries, including Hungary and Argentina, could become "the next Iceland" and default on their debts.
The freeze in the credit markets showed further signs of easing, however, with the main lending rate between banks down from 6.038 per cent to 6.005 per cent. Interbank lending rates dictate how much banks and building societies charge for mortgages and other loans.
The cull of 10 per cent of the workforce at Goldmans will send shockwaves through an organisation that has always seen itself as immune from the problems that have afflicted lesser investment banks.
Headhunters said it was virtually unprecedented for a firm like it to be forced into such large-scale job cuts.
Shaun Springer, chief executive at headhunters Napier Scott Executive Search, said: "When a lean and mean firm starts trimming they're cutting into muscle. The fact they are cutting 10 per cent is quite indicative that there are still a lot of problems ahead."
However, the bankers who are shaken out of Goldmans, founded in New York in 1869, are unlikely to be unemployed for long, even in the current market. Having Goldman Sachs on the CV still carries a cachet that will allow them to pick a plum job, according to headhunters.
Tens of thousands of jobs have already been lost in the global investment banking industry.
Citigroup has shed 24,000 workers around the world over the past 18 months. Lehmans, which collapsed on 15 September, has got rid of almost 14,000 jobs and Merrill Lynch is expected to cut 10,000 after it was acquired by Bank of America.
All the redundancy programmes will have a major impact on London as most Wall Street investment banks have built up their City or Canary Wharf offices as headquarters for their non-US operations.
Reader views (9)
I'm going to miss the canteen there. The salad was really fresh and fruit exotic
- Lee Osman, London
I agree with every thing you've stated Damien Vaugh (Greenwich)...I think pumping billions and billions of pounds into saving these institutions is like trying to stop a leak on a ship by filling the hole with blu-tac...it just won't work! We should not be papering over the cracks and instead should be looking at the root cause of the problem which, I think, stem from the very foundations on which these business entities operate....
- Ali Sichilongo, London
Do the sackings mean London Financial Markets are free of a further 600?
- Jose Luis, London, UK.
This is terrible news. Poor Goldman Sach.
- K Reynolds, London
I worked there for 10 months as support staff.
NONE of the bankers seem to "work" anyway. Just bragging about material stuff, off to the work gym, off to the work canteen and brag about some more stuff, and oh - check emails.
- Chicq, London
A lot of them are expats, and will leave the UK. Good bye.
- Mike, London
I recommended that others read the interview by Anna Schwartz that basically said that the measures being taken by governments did not address "The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."
As if to reiterate that at a conferance today Professor Nouriel Roubini, a former Senior Advisor to the US Treasury Department has warned hundreds of hedge funds, holding trillions of pounds, will fail.
The enormity of the crisis is that the stock markets around the world will be forced to shut for a week or more as investors try to dump their shares.
Ms Schwartz has argued that the governments are wrong in recapitalising failing institutions on the premise that it will protect the bigger system. She says " Everything works much better when wrong decisions are punished and good decisions make you rich"
Ms Schwartz co-authored, with Milton Friedman, "A Monetary History of the United States" (1963).
She argues in the Wall Strret Journal interview by Brian M. Carney, that the toxic debts rae toxic because no-one knows the value of the debts. There is a mistrust that the balance sheets of major institutions do not reflect the liabilities of these toxic debts and so banks are reluctant to lend to each other.
She also says it takes real guts to let a large powerful institution fail, but the current credit freeze as an alternative is worse.
- Damien Vaugh, Greenwich, London.
Looks like they should be called Goldmine Sacks.
- Adam, Harrow, UK
aw diddums..my heart bleeds for the "haves and have yachts",as they refer to themselves....
- Pat, The Hague, Netherlands
