According to a state filing on Wednesday, The Goldman Sachs Group Inc. (GS) intends to lay off 230 workers in New York State due to economic reasons. The layoffs will be executed during the fourth quarter of 2011 and the first quarter of 2012.
The State Department of Labor made The New York State Workers Adjustment and Retraining Notification Act, known as the WARN Act, effective on February 1, 2009.
Under the provisions of the law, New York-based companies having 50 or more workers in New York State are required to give 90 days notice to the State if they are planning to reduce the local workforce. Further, the law requires prior notices for plant closing, large layoff, relocation, or reduction in working hours.
The law was enacted with the intention that the Labor Department will have sufficient time for the retrenched employees, in providing them information regarding unemployment insurance and other resources.
Goldman’s New York layoffs represent less than 1% of its 35,400 employees as of March 2011. The layoffs would be in addition to the company’s annual retrenching of workers, who perform in the bottom 5% or so. However, Goldman is also hiring employees in China, India and Brazil following growth in such markets.
Goldman coupled with other large Wall Street banks have started reducing their workforces to cut costs following the slowdown in economic and market activity. Further, some large Wall Street banks are laying off employees due to weak trading volumes and stringent regulations on some parts of their business.
Other Wall Street banks planning layoff include Barclays Capital and Credit Suisse Group AG (CS) as they are struggling with reduced revenue from trading stocks and bonds. Further, according to a regulatory filing, Bank of New York Mellon Corp. (BK) also informed the labor department about its plans of cutting 124 jobs in its treasury services operations lockbox. The jobs cut will take place in segments beginning July 1, 2011 and continue through March 31, 2012.
In March 2011, Wells Fargo & Company (WFC) also announced that it will lay off approximately 200 employees, including 82 employees in San Antonio, 30 in Addison and 67 in Bedford, Texas in its home mortgage division.Wells Fargo employs about 13,000 people in metro Des Moines. The company’s Home Mortgage division, which is based in West Des Moines, captures approximately 25% of the U.S. home lending market.
Wells Fargo also announced the elimination of 68 positions at a Vancouver call center, which supports collection of loans for Wells Fargo Financial division, the company’s consumer finance subsidiary. The action followed as the customers are paying down debt, eliminating the need for debt collectors.
Bank of America Corp. (BAC) also announced jobs cut of approximately 100 employees in its consumer and small business banking unit as of March 2011. The layoffs form a part of BofA’s ongoing efforts to overhaul its consumer banking unit.
We believe that the present job cuts will enable Goldman to reduce expenses, alleviating bottom-line pressure.
Goldman currently retains its Zacks #4 Rank, which translates into a short-term Sell rating. However, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.
