05:54 GMT21 January 2021
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    Amid lackluster performance in US corporate sector, particularly, financial services segment, one of the biggest banks, Goldman Sachs, is cutting more jobs, for the third time this year, attempting to fix its commercial performance by austerity measures.

    Kristian Rouz – As the US corporate sector struggles amid the ongoing decline in profits stemming from the dollar’s strength, the Federal Reserve’s still not abandoned tightening cycle and international headwinds, Goldman Sachs notified regulators of more staff layoffs starting in July, highlighting the dismal labor market prospects in the current economic environment.

    One of the biggest US financial services corporations, Goldman Sachs is bucking the trend of jobs being eliminated in the once-burgeoning sector of the economy, adding to the anxiety of sluggish broader growth and private sector incentive profitability in the US.

    Goldman Sachs notified the New York Labor Department they would eliminate 98 jobs between 17 July and 29 October, bringing the total amount of personnel laid off to 353 this year only amidst profitability concerns. This would be the third round of staff dismissals this year for Goldman. Things are not that bad, however, as in two preliminary filing with the state’s Labor Department in March and April Goldman cited their intention to cut 109 or 146 jobs, respectively.

    Nonetheless, the overall situation is deteriorating for Goldman. According to the company’s earnings reports, its revenues in the most recent quarter only climbed to $6,338.00 mln compared to $7,273.00 mln in 4Q15. Previous expectations for 1Q16 were at $6.724.12 mln, therefore, earnings are poised to decline given the unfavorable industry situation lingering since at least 3Q15.

    Goldman’s stock valuation was at risk, but after the announced cuts, the company’s shares climbed in early Wednesday trading, in line with the overall Wall Street gains drive by healthcare sector ahead of the UK’s Brexit vote.

    In its filing with the NY Department of Labor, Goldman said the employees being laid off were not represented by a union, there is no conflict of interest, and the reason of personnel cuts cited as “economic”.

    The employees subject to layoffs have worked in various Goldman divisions, and received three notifications of cuts, in April, May, and early June. In late March the company employed 36,500 total staff, as outlined in Goldman’s previous filings.

    Goldman’s deteriorating positioning in trading and deal making, particularly, overseas, in line with the overall decreasing competitiveness of US-based businesses, triggered the recent decline in the company’s financial performance. Lower market growth and affordability of dollar-denominated liquidity for international borrowers are other major reasons that contributed to Goldman’s declining net income, returns on equity and thinning cash flow – even though the global volume of aggregate FDI hit its pre-2008 highest in 1Q16.

    Goldman’s financial situation is still far from being dire. With roughly 26% of Goldman’s stock in the hands of company insiders, according to Securities and Exchange Commission (SEC) data, there was an alternative to layoffs in the form of insider stock buybacks, yet, the company’s management opted for austerity measures.

    Previously, Goldman cut many top-management jobs, including vice presidents, executive directors and managing directors, whilst also having melt their debt and capital market teams due to lower profitability in both.

    With bond market volatility declining amid rife demand for US Treasuries from both domestic and international investors, Goldman might be cutting roughly 10% of its fixed-income team soon as the division has been generating less income recently. Last year, Goldman cut 5% of its fixed-income division personnel.

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