Hello there, it's Aaron Weinman in New York. Goldman Sachs warned it will slow its hiring ambitions and bring back dreaded annual performance reviews. The bank put these reviews on hold during the earlier stages of the pandemic, but weaker earnings have forced its hand.
Let's look into it.
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1. Goldman Sachs will reduce the "velocity" of its hiring, and won't fill some roles that are vacated through natural attrition. The bank has also reduced compensation expenses for the first half of this year by $3.5 billion versus the same period in 2021, Chief Financial Officer Denis Coleman told analysts during Goldman's second-quarter earnings call on Monday.
Goldman also warned it will reintroduce its annual performance reviews, something it put on hold during the earlier stages of the pandemic. Banks have used such reviews to purge their workforces of under-performing bankers. Historically, Goldman's performance checks have led to the bottom 5% of the staff being laid off.
Weak earnings, particularly in firms' investment-banking divisions, have folks braced for job cuts as Wall Street firms come to terms with a volatile market and high inflation. That's contributed to a slump in dealmaking. M&A volumes are down 21% year-over-year, and fees from equity capital markets are down 72%.
And it's not just dealmakers that are fearing cuts. College grads are concerned that their full-time offers might dwindle, too.
BlackRock also told staffers that it's scaling back hiring plans on the back of economic uncertainty, Insider previously reported.
Wall Street firms' adoption of hiring freezes comes just months after many showered bankers with handsome bonuses. Dealmaking soared in the first two years of the pandemic as cheap money and high company valuations prompted firms to tap the capital markets for debt, or to go public via IPO, or through a tie up with a special purpose acquisition vehicle, or SPAC.
Today, however, the sharp dip in revenues in investment banking has prompted a sea change across Wall Street.
Here's everything we know about banks' belt tightening efforts and how it will impact jobs and pay.
In other news:
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3. Lawyers allege Carvana's founding family used unlawful means to stay in control. The Garcia family controls over 87% of the votes in the online car dealer, but the same lawyers who went after Palantir over its founders' voting power have set their sights on Carvana.
4. A bright spot is emerging on Bank of America's trading floor, and it's coming from an unexpected place. BofA's FX and emerging-market trading has enjoyed some wins as strong sales and trading numbers prop up an otherwise weaker earnings season.
5. Two ex-quant traders exploited their industry's notorious noncompetes to bootstrap a billion-dollar crypto startup. Tarun Chitra and Rei Chiang ditched quant trading to start Gauntlet, which helps companies manage risks around crypto lending.
6. SoftBank has put on hold plans for an IPO of Arm in London due to political uncertainty in the UK, the Financial Times reported. The Japanese investor's decision is another blow to an already wounded equity-capital-markets space, which is navigating a dip in dealmaking and potential job cuts.
7. A 38-year-old makes $2,200 in monthly interest investing in peer-to-peer loans. Here's how he set up this easy passive income stream.
8. Swiss startup Nevermined raised $3 million in Series A funding after launching in April. The company is focused on opening up access to Web3, and here's the 13-page pitch deck it used to secure the money.
9. Russia had ambitions of making Moscow a global finance hub. The annexation of Crimea in 2014, and today's war in Ukraine have crushed that dream.
10. Rich residents of Michael Meldman's Silo Ridge Club reckon they're getting fleeced. Dozens of owners of multimillion-dollar homes are suing Amenia, a town in New York, over property taxes.
Done deals:
- Payments company Transact has acquired mobile-ordering company Hangry. Canadian Hangry provides a mobile-ordering platform for schools.
- Australian bank ANZ agreed to buy local peer Suncorp Bank from its parent Suncorp Group for roughly $3.3 billion.
Curated by Aaron Weinman in New York. Tips? Email [email protected] or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.