Sharp falls push Goldman Sachs to lay off 1000 staff

Goldman Sachs will lay off 1000 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 it is losing market share in bond trading, a business that had 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 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 begun laying off staff around the world, and 1000 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.

Overall profits were US$1.05 billion ($1.23 billion), and earnings per share of US$1.85 were about a fifth below estimates.

- Independent