Goldman Sachs will lay off 1,000 staff before the end of the year, amid sharp falls in trading activity.
The investment banking giant missed investors' forecasts for revenue and profits in the second quarter, raising the possibility that it is losing market share in bond trading, a business that had previously been a major engine of its growth. Recent results from Citigroup and JP Morgan have beaten expectations.
"Certain of our businesses had disappointing results as we reduced our market risk in response to attempting to manage fluctuations in prices and market liquidity," Goldman's chief executive Lloyd Blankfein said yesterday. He blamed macroeconomic risks, such as concerns over European debt and disruption to Middle Eastern oil production.
New regulations and caution about exotic financial products have also curtailed the freewheeling trading seen before the credit crisis.
The company has already begun laying off staff around the world, and 1,000 people – about 3 per cent of the workforce – will have gone by the end of the financial year.
David Viniar, the chief financial officer, said trading feels "a little better" in the third quarter, but warned business will be slower for the foreseeable future. Fixed-income trading now accounts for a smaller proportion of revenues than equities trading. Overall profits were $1.05bn, and earnings per share of $1.85 were about a fifth below estimates.