Softer deal and activity volumes forces Goldman Sachs’ hand in global staff cull

Senior players have been spared but others are preparing for bad news as the investment bank culls 3200 positions worldwide, including from Australian operations.

Goldman Sachs has begun a series of staff cuts in markets around the world, including Australia. Picture: EPA

Goldman Sachs is preparing to axe as many as 10 Australian staff as the investment banking giant embarks on a global cost-cutting round, after 2022 generated softer deal and activity volumes.

Sources said the local cuts had largely spared senior employees in the Australian investment bank, but staff were on tenterhooks given the move. A spokeswoman declined to comment.

Goldman is removing as many as 3200 jobs around the world this week as it reduces costs and preserves the bonus pool for top-performing staff. Speculation has centred on cuts across Goldman’s trading and banking operations ahead of bonuses being 40 per cent down on the prior year.

This week, Goldman informed local clients it was suspending coverage of Australian and New Zealand real estate investment trusts. It said analyst Jeffrey Pehl was leaving the firm, while offsider Daniel Downes was transitioning to a new role within global investment research. The decision means coverage of stocks including Centuria Capital, Charter Hall, Goodman, GPT and Charter Hall Social Infrastructure REIT will stop.

In Australia, Goldman finished 2022 in second spot in Refinitiv’s announced merger and acquisition league tables, behind Barrenjoey and its partner Barclays. That reflected deals with any Australian involvement with Goldman advising on transactions worth $US39.6bn.

In equity capital markets, Goldman did not fare as well last year, dropping to ninth place in the league tables. It worked on ­equity capital markets deals amounting to almost $US691m.

The volume of ECM deals slumped to a 20-year low of $US17.4bn in 2022, according to Refinitiv, while announced M&A of Australian targets tumbled almost 60 per cent to $US91.3bn.

Senior bankers canvassed by The Australian in December said 2022 bonuses would be slimmer in this market, pointing to average cuts in the order of 20-30 per cent in total compensation.

Bankers at Wall Street-based banks are typically informed of their bonuses in the first few weeks of the calendar year, while European bankers tend to be told in late January and February.

However, this year’s pay cuts come after bumper payments this time last year, which reflected record M&A activity in 2021.