The Goldman Sachs Group is considering cutting more than 5 per cent of its fixed-income traders and salesmen later this quarter as it contends with an industry-wide revenue slump, according to a person with knowledge of the matter.
The bank will make a decision after evaluating client activity during the period, said the person, who asked not to be identified because the deliberations are private.
It ultimately may cut deeper in those operations than its yearly push to cull about 5 per cent of staff to make way for new hires, or it could shrink the unit by refraining from replacing those who go.
The Wall Street Journal on Wednesday reported that the New York-based investment bank plans to cut up to 10 per cent of the unit's traders and salesmen. The move would not affect more than 250 people, the daily said, citing sources.
Goldman Sachs has stuck by those operations to boost market share while rival banks increasingly acknowledge fixed-income trading revenue is not bouncing back after falling by more than half since 2009. The trading slump and stiffer capital requirements have prompted firms such as Deutsche Bank and Morgan Stanley to eliminate staff in recent months.
Morgan Stanley included about 470 traders and salesmen from its fixed-income and commodities business in a plan to cut about 1,200 people worldwide. That amounts to 25 per cent of the New York-based firm's fixed-income trading staff, with other reductions coming in infrastructure and support roles, according to the person.
European banks also have been reducing staff amid pressure to strengthen balance sheets, cut costs and improve profitability.
Zurich-based UBS Group largely exited the capital-intensive fixedincome trading business in 2012.
London-based Barclays has been shrinking its operation as part of a broader plan to eliminate 19,000 jobs by this year.
Frankfurt-based Deutsche's fixedincome and currency division is likely to be affected in a companywide overhaul unveiled in October.
The long decline in fixed-income trading revenue is probably ending, according a survey of 147 analysts and portfolio managers released last month by Institutional Investor and Broadridge Financial Solutions. Still, any turnaround for banks will be slow, likely amounting to an increase of only 0.2 per cent per year through 2020, the respondents said.
BLOOMBERG
