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[NEW YORK] Goldman Sachs Group Inc plans to eliminate more than 5 per cent of traders and salespeople in its fixed-income business, cutting deeper into those operations than an annual companywide cull that has already begun, according to a person briefed on the matter.
The reductions will affect less than 10 per cent of the fixed-income workforce, said the person, who asked not to be identified discussing personnel matters. The firm filed a list of 43 workers with the New York State Department of Labour last month, alerting the agency to the first round of cuts across the New York-based company.
Goldman Sachs typically eliminates the bottom 5 per cent of performers around this time each year to make way for new hires, but it sometimes exceeds that amount. The firm was considering cutting deeper in its fixed-income business in this round amid an industry-wide revenue slump, a person familiar with the deliberations said in January.
The discussions started earlier than usual this year, and workers will be informed in conversations throughout this month and into April. Goldman Sachs said in the February filing that the 43 dismissals would officially occur between May 9 and July 1, according to a document on the state's website.
Chief Executive Officer Lloyd Blankfein has stood by fixed-income operations to win more customers as rivals increasingly retrench and acknowledge that their revenue from that business isn't bouncing back. Still, he told investors last month that the firm has trimmed fixed-income headcount 10 per cent since the start of 2012 as it balances a quest for market share with a focus on returns. Meantime, the company has added more than 3,000 workers since the end of 2011.
"We remain committed to our FICC business, but we're also managing to the cycle," Blankfein said last month, referring to fixed-income, currencies and commodities. "We don't regard this as a structural change. It might be structural aspects to the evolution of the FICC market in terms of some of the rules and the technologies and the platforms that are being used - but I don't think it's going out of business." Goldman Sachs made its latest decision after evaluating client activity in this year's early months - a period in which some firms signalled further slowdowns. JPMorgan Chase & Co's investment bank said Feb 23 that revenue from equity and fixed-income sales and trading has tumbled about 20 per cent this year. Goldman Sachs hasn't provided similar guidance.
Other Wall Street banks also have been eliminating jobs. When Morgan Stanley cut about 1,200 employees in the fourth quarter, it included about 25 per cent of its fixed-income trading staff.