Goldman to Report $2B Loss in Credit Card, Installment Businesses

Goldman Sachs is reportedly set to unveil a $2 billion loss in its new business.

The loss in its credit card and installment-lending business Platform Solutions were made worse by new accounting regulations, under which the firm had to set aside more money as loan volumes grew, according to a Bloomberg report Sunday (Jan. 8), citing a source with knowledge of the matter.

The firm will also eliminate 3,200 jobs, its largest round of layoffs ever.

It will begin the cuts this week, with the total number of workers impacted not exceeding 3,200.

The job cuts are part of a wave of bank layoffs happening amid a worldwide downturn in mergers and acquisitions and other dealmaking.

More than a third of the layoffs will come from Goldman’s trading and banking units, the Bloomberg report said. A Goldman spokesperson declined to comment Sunday evening.

The report notes that the job cuts will come the same week that Goldman Sachs holds its annual year-end compensation discussions. Those figures are expected to fall, the report said, particularly for people working in investment banking.

The news comes weeks after reports that Goldman’s layoffs could reach as high as 4,000 workers. The cuts follow the company’s laying off of 500 employees in September. It also revealed its intentions last month to trim hundreds of staff related to its retail banking business — a number that is included in the larger layoffs.

Last year also saw Goldman reportedly embark on one of the largest reorganizations in its 150-plus year history, streamlining itself into three divisions: investment banking and trading, asset and wealth management, and transaction banking. The change involved folding Marcus, its retail banking operation, into the bank’s wealth unit.

CEO David Solomon told analysts at the time that Goldman Sachs’ new direct-to-consumer (D2C) strategy will mean focusing “on existing deposit customers and consumers that the bank already has access to through channels like workplace and personal wealth, rather than seeking to acquire customers on a mass scale.”

As PYMNTS reported last month, investment bank layoffs have hit Europe’s financial centers too, with Citi, Barclays, Credit Suisse, Deutsche Bank and Lloyds all cutting staff with their investment banking teams as European operations have been especially hard hit by lower performance in their investment banking and institutional client services operations.

Meanwhile, the last six months of 2022 saw a record drop in global merger-and-acquisition (M&A) activity, with the volume of deal-making dropping from $2.2 trillion in the first half of 2022 to $1.4 trillion in the second half of the year.