Global investment banking adapts to shrinking markets: the outlook for increasing international investments

(Video Transcript)

Goldman Sachs

Goldman Sachs announced it’s starting to cut managing directors jobs around the world as it cuts headcount amid a slump in mergers and acquisitions activity from companies and also from companies wanting to raise money.

Bloomberg reported that Goldman Sachs will shed 125 managing director roles. Of the nearly 40,000 employees the company has, Goldman doesn’t report on how many managing directors it has, although in 2021 it promoted 643 to empty roles.

Those roles also carry a partnership qualification. Looking at what happened with Goldman Sachs or Sessions on the trading day on Friday, it disappeared below the line of support we had established, which was the low point we had back on the 1st of June. 3149 closed at 31 for 77 when all was said and done, just above that as a line of support. Goldman Sachs shares fell on Friday after CNBC reported the bank is likely to take a large writedown for its acquisition of fintech lender Green Sky.

Goldman Sachs has been running a sale process for GreenSky, acquired in 2021 for $2.2 billion, and may take a write-down on the $500 million of goodwill. Goldman Sachs is not the only company in the sector in the news.

JPMorgan Chase and Company

JPMorgan Chase & Co. also announced it will bring to an end around 40 investment banking positions as part of its effort to cope with a global slowdown again.

Bloomberg reported recently that Citigroup Inc announced it’s cutting hundreds of jobs across the company this year and is planning to shed 30 investment banking jobs and 20 more at its corporate bank in London. I just want to show you what’s been happening with JPMorgan Chase. On Friday, it ended a down day, but it was off the lows at 3886 again.

Citigroup

When you see a company cutting jobs, it is potentially a positive stock story. Citigroup Inc is another one worth watching out for. At the start of today’s session, these are all session stocks, and they will all start at 9:00 this morning on the American International Group (AIG) platform.

After a week of heavy losses last week, Citigroup Inc will open at 46 and 2. So the banking sector will certainly be the focus of attention in the coming weeks or so.

The Federal Reserve

On Wednesday, the Federal Reserve (Fed) is due to release the results of its annual bank health checks after the market closes. And these results will dictate just how much capital the banks need to stay healthy in extraordinary conditions and how much they can return to shareholders through share buybacks and dividends.

Now, banks aren’t allowed to announce their plans for dividend buybacks until typically a few days after the stress test results, but we can expect them at the latest when they publish their quarterly earnings in mid-July.

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