"Big Bank Cuts Costs Via Layoffs And Smaller Cups, While Increasing Bonus Pool"
Wall Street is planning to lay off thousands of workers in a supposedly underperforming quarter, and Goldman Sachs is no exception, saying that it plans to cut $1.2 billion in costs by laying off 1,000 people, roughly 3 percent of its workforce. The mega-bank is also going after small savings by downsizing its drinking cups.
Even plants aren’t safe from the bank’s tightened budget. The London office removed potted plants, reportedly causing “disquiet” among employees and led “to a stand-off between the plant pickers and staff.” Morgan Stanley has also cut back on office foliage, while Bank of America skipped an annual field day.
However, the real measure of whether Wall Street is serious about cutting costs will be if bonuses go down during lean times. And so far, the chances do not look good. The New York Times’ Dealbook reports that banks, including Goldman, have set aside $65.69 billion for bonuses at the end year, an 8 percent increase over last year:
Wall Street executives are also preparing their staffs for smaller year-end bonuses, although the change is not yet reflected in the expenses. During the first six months of the year Citigroup, JPMorgan, Goldman, Morgan Stanley and Bank of America set aside $65.69 billion to cover compensation and benefits, up 8 percent from a year ago, according to data provided by Nomura. But financial firms tend to wait until the fourth quarter to make the call on the annual payouts.
Unless Goldman and other banks follow up a tough season by handing out smaller bonuses later this year, its cost-saving initaitves are only superficial. A group of shareholders challenged the Goldman board of directors for showing “scant regard” for their interests, having handed out billions in bonuses the same year it received federal aid. Goldman won a dismissal of the case yesterday.
The bonuses may have been a part of “God’s work,” which Goldman CEO Lloyd Blankfein claimed to be doing in 2009, but if Goldman practiced the same austerity toward bonuses that it did toward office plants, it could afford to keep both its employees and its 12 ounce cups.