Goldman Sachs Group Inc., a global investment banking giant, is preparing to enter the new year with a round of redundancies. The Group's Chief Executive Officer, David Solomon, confirmed the plans in his annual message sent to employees.

According to Bloomberg, staff cuts could be as high as 8%, which translates into 4,000 jobs. However, the final value of the layoffs may be lower and will depend on top managers' decisions, who have been asked to identify potential cost-cutting targets.

"We are conducting a careful review, and while discussions are still ongoing, we anticipate our headcount reduction will take place in the first half of January," Solomon commented in the annual year-end letter.

Goldman's CEO was said to have pointed to tightening monetary conditions and the need for the company to prepare for new economic headwinds.

Goldman Sachs, Falling Income, and Potential Job Cuts

In October, the investment banking giant released its report for the third quarter of 2022, which showed a decline in net income of about 44% compared to the same period a year earlier. Quarterly revenues declined, but Goldman Sachs is on track to report one of its most significant annual revenues ever, reaching nearly $50 billion.

"Net revenues were $11.98 billion for the third quarter of 2022, 12% lower than a strong third quarter of 2021 and 1% higher than the second quarter of 2022. The decrease compared with the third quarter of 2021 reflected significantly lower net revenues in Investment Banking and Asset Management, partially offset by higher net revenues in Global Markets and Consumer & Wealth Management," the company commented in the quarterly earnings report.

The bank's shares have gained more than 16% in Q4 2022, reaching $340.87, but lost about 11% year-to-date. However, the result is significantly better than the benchmark S&P 500 index slipping more than 20% YTD.

Goldman Sachs Makes Move to Boost Revenue

Also in October, Reuters reported that the world's second-largest investment bank plans to merge its investment banking and trading business to maximize revenue. In addition, the financial services firm will absorb its consumer banking business, Marcus, into a combined asset and wealth management unit.

The merger of the divisions is expected to reduce dependence on the volatile performance of the two divisions. Rising inflation rates and interest rate hikes have hit Goldman's financial results hard in 2022.

However, other major investment banks, including rival JP Morgan Chase & Co (JPM) and Morgan Stanley, also suffered. JPM's quarterly profit fell 17% to $9.74 billion, while the latter lost 30% to $2.6 billion compared to the same quarter a year earlier.