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FirstFT: Goldman’s biggest cuts since financial crisis

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Goldman Sachs has embarked on its biggest cost-cutting exercise since the financial crisis, with the Wall Street bank reviewing spending on everything from its private jets to expenses at a new technology and consumer unit.

The spending review comes as Goldman starts to implement more than 3,000 job cuts, with many employees in London and New York due to learn their fates today. Investment bankers are also bracing themselves for a reduction of 40 per cent or more in their annual bonuses.

Ericka Leslie, the bank’s chief administrative officer, has emerged as a central figure in the review under the direction of Goldman president John Waldron, according to multiple people briefed on the matter.

The exercise comes as the lender prepares for a potential recession and another year of lacklustre M&A and capital markets activity. It marks an abrupt reversal from the largesse of 2021, when Goldman and its Wall Street peers went on a hiring spree during a dealmaking and trading boom.

  • Earnings season preview: America’s biggest banks are set to report another quarter of bumper profits, but the outlook for this year is dimmer as the Federal Reserve’s rate rise cycle nears its end.

  • The Fed’s role: Chair Jay Powell said yesterday that the central bank must stick to stabilising prices, the labour market and the banking system, and resist the urge to address other social issues.

1. Bolsonaro plans return to Brazil in wake of riots Brazil’s Jair Bolsonaro has said he is preparing to return home from the US in the next few weeks after thousands of his supporters stormed government buildings in his country’s capital. The former president has been in Florida since the end of last year, following his election defeat to Luiz Inácio Lula da Silva.

2. FTX boss invested in fund that backed his exchange Sam Bankman-Fried invested $20mn in Paradigm, a venture capital fund that also took a stake in his FTX cryptocurrency exchange group. The arrangement highlighted in court disclosures sheds light on the fallen billionaire’s circular transactions.

3. Virgin Orbit scrambles to explain failed satellite launch The US-based company has appointed a team to investigate Monday’s failed satellite launch from Cornwall. Virgin Orbit said yesterday it was still “too early” to set a date for another attempt after the UK’s hopes of making history as the first country to put a commercial satellite into space from western Europe were dashed.

4. World Bank: global economy on ‘razor’s edge’ of recession The Washington-based organisation warned that the global economy risks falling into recession this year, as the institution unveiled its latest projections for global growth. The World Bank expects the world economy to grow by just 1.7 per cent this year, a sharp fall from an estimated 2.9 per cent in 2022.

5. Ukrainian troops to travel to US for Patriot missile training The Pentagon will begin teaching Ukrainian troops to use Patriot missile systems in the US next week, marking one of the few occasions where Kyiv’s forces will be trained on American soil since Russia’s full-scale invasion began last year.

The day ahead

Economic data Italy releases retail sales figures for November, Spain has industrial production data for the same month and London’s Heathrow airport publishes its December traffic report.

Sunak to sign defence pact with Kishida The UK prime minister hosts his Japanese counterpart in London. They are expected to sign an agreement that will allow them to deploy forces in each other’s countries.

UK ambulance worker strikes Thousands of paramedics and call handlers will strike again in England and Wales after ministers and unions clashed on claims that industrial action will risk patient safety.

Prime Minister’s Questions restart Rishi Sunak and Labour leader Keir Starmer will cross swords in parliament for the first time this year, with strikes high on the agenda.

Corporate earnings Earnings season picks up with supermarket chain Sainsbury’s, property developer Barratt, builder’s merchant Grafton, recruitment company PageGroup, Topps Tiles, JD Sports, Jaguar Land Rover and iron ore producer Ferrexpo reporting.

Martin Wolf will be joined online by other leading thinkers at an event to promote his new book, The Crisis of Democratic Capitalism, on January 31 for a subscriber-exclusive event. Register for free here.

What else we’re reading

Germany leads on regulating Big Tech While EU regulators work out how to implement their landmark Digital Markets Act, Berlin is already opening high-profile probes into the world’s largest tech companies. German regulators say their new antitrust law is years ahead of the EU’s in clamping down on so-called gatekeepers such as Meta, Google and Amazon, and could capture more illegal conduct.

Wirecard trial’s chief witness Oliver Bellenhaus spent much of his time as Wirecard’s high-flying manager convincing auditors that its operations in Asia were real. Now, as the prosecution’s chief witness in one of Europe’s highest-profile fraud trials, he has to do the opposite: convince judges that the same subsidiary he led in Dubai is a complete sham.

Italy renews Africa plan After Russia’s invasion of Ukraine, Rome is seeking to develop stronger energy ties with Africa, in a callback to the “Mattei plan”, writes Silvia Sciorilli Borrelli. Not doing so may risk dealing a significant blow to the EU and Italy’s plan to regain a leading role in the Mediterranean.

The Toshiba harbinger for private equity Plans for a buyout of the industrial conglomerate will be a test of financing conditions, writes Kana Inagaki. While Japan offers more predictability and less geopolitical risk than many other nations, the market is not immune to the forces leading to a global slowdown in deal activity.

Private jet business booms The private jet use that surged during the pandemic is showing no signs of abating, even as passengers return by the millions to commercial airlines and inflation raises the cost of a charter. “We have individual and corporate members that have fully transitioned to flying private due to reduced or limited commercial service,” says Kenny Dichter, chief executive of private jet charter Wheels Up.

Have you used a private jet to travel since the beginning of the Covid-19 pandemic? Tell us in our poll.

Take a break from the news

FT Globetrotter got a first look at the new seafood restaurant Hav & Mar from Marcus Samuelsson. The Swedish-Ethiopian restaurateur aims to set an example in the industry by hiring Bipoc (black, indigenous and people of colour) staff and sourcing ingredients from Bipoc producers, while revolutionising kitchen culture and focusing on sustainability.

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