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According to a person with knowledge of the situation, Goldman Sachs, the storied investment bank, plans on cutting up to 8% of its employees as it girds for a tougher environment next year. The layoffs will impact every division of the bank and will likely happen in January, according to the person who declined to be identified as speaking about personnel decisions. That’s ahead of an upcoming conference for Goldman shareholders in which management is expected to present performance targets. The New York-based investment bank typically pays bonuses in January, and it’s possible the layoffs could be a way to preserve bonus dollars for remaining employees.

Wall Street is adjusting to a lower revenue environment this year after a two-year boom in deals and hiring sputtered out. Goldman was the first major firm to cut jobs in September, a relatively shallow culling that only impacted a few hundred employees. That was followed by similarly modest cuts at Citigroup and Barclays, though Morgan Stanley cut about 1600 workers last week, CNBC was the first to report. But Goldman’s upcoming decision is the most significant round of cuts on Wall Street. Michael Karp, a Wall Street recruiter, believes that other firms may be forced to follow suit in light of the ongoing subdued capital markets environment. “Many firms will have to go back to the drawing board and right-size their organizations, it’s not just Goldman,” said Karp, CEO of the Options Group. “Firms over-hired, and now they will have to over-fire, too.” The bank’s planning is ongoing through next month, and the round could be smaller than 8% when it is finalized, especially if people voluntarily leave, the person with knowledge of the situation added. But that means as many as about 4,000 employees could be impacted, as reported by Semafor earlier Friday. Those considered underperformers or working in consumer businesses that the bank is now de-emphasizing are at most risk of being terminated.

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