The asset management arm of Goldman Sachs Group Inc. is preparing to reduce a significant part of nearly $60 billion in alternative investments, Reuters reported on Monday. A member of the firm's Board of Directors told the agency that the move is expected to reduce the burden on financial performance and revenue.

Goldman Sachs Will Slim Down Alternative Investments

Over the next few years, Goldman Sachs wants to exit a number of positions and replace them with external capital. The alternative investments will not be reduced completely, as the giant intends to continue investing alongside funds instead of individual deals on the balance sheet.

"I would expect to see a significant decline from current levels," Julian Salisbury, the Chief Investment Officer of Asset and Wealth Management at Goldman Sachs, told Reuters during a recent interview.

The alternative group of assets includes real estate or private equity, standing in opposition to traditional instruments, such as bonds and equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term. Detailed plans for the reduction of assets will be presented at an investor day scheduled for February 28.

Goldman Sachs reported a very weak fourth quarter last year, falling short of Wall Street's forecasted results. Like other major investment banks, it is having trouble with a dealmaking slump, which led to the decision to cut staff. The current reduction is expected to be one of the largest since the 2008 financial crisis.

In a commentary on the results, the bank's CEO, David Solomon, wrote that under challenging market conditions, the institution wants to strengthen its core business and increase efficiency.

Our Chairman and CEO David Solomon comments on $GS' full year and 4Q 2022 earnings results: https://t.co/h5XO87I5TG pic.twitter.com/ZLIFv6deP8

— Goldman Sachs (@GoldmanSachs) January 17, 2023

3,200 People Will Lose Their Jobs at Goldman Sachs

Back in December 2022, media reports suggested that Goldman Sachs plans to reduce up to 8% of its current workforce, laying off approximately 4,000 people. However, the bank said in January that final cuts would affect 3,200 jobs.

More than 30% of the reduction will be in the trading and banking units, which are among Goldman Sachs' core businesses. Overall employment has increased significantly since 2018, by 34% to nearly 50,000.

"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," David Solomon, the Group's Chief Executive Officer, commented in the annual year-end letter.

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Big Banking Players Cut Headcount

In addition to Goldman Sachs, the job cuts were announced by Credit Suisse, which intends to slim down its European investment banking division by 10% (about 9,000 people). The financially troubled entity allegedly made hundreds of job cuts already in December, primarily at its London and Zurich offices.

Barclays slashed its workforce by 3% in November, cutting jobs in its corporate and investment banking unit. In the same month, Citi also decided to cut jobs, eliminating dozens of investment positions.

Additionally, the employment crisis is evident in the cryptocurrency industry, where ConsenSys and Coinbase are cutting jobs.