Goldman, Sachs & Co. officials continued yesterday that several executives in its municipal bond department have been laid off as the slowdown in volume continues to take its toll on the industry.
David C. Clapp, a general partner at Goldman, said that "selective layoffs" have been made in various divisions of the municipal bond department.
Clapp declined to specify the names of individuals let go or the total amount laid off, but dismissed rumors that 10% of the department had been released.
According to sources at the firm, between 12 and 14 municipal executives received termination notices yesterday, including three from Goldman's San Francisco office. Sources said that Goldman will cut as many as 30 municipal officials by the end of the year, but even the firm's employees were unaware of the full extent of the reductions.
Through the first nine months of 1994, Goldman Sachs ranked second to Merrill Lynch & Co. among senior managers of long-term bonds with a 10.5% market share, according to Securities Data Co. Goldman also ranked second last year through the first nine months with an 11.4% share of the long-term market. However, the firm's overall underwriting activity iS down 47.8%, to $13.1 billion from $25.1 billion in the first nine months of 1993. Meanwhile, overall sales of new municipal bonds are down 44%.
The Goldman cuts come ,less than a week after Kidder Peabody & Co. laid off several members of its municipal bond department amid continued rumors that PaineWebber Inc. plans to buy Kidder's brokerage unit. Market sources said yesterday that the deal had been completed but PaineWebher officials would neither confirm nor deny the reports. Kidder executives contacted late yesterday said they expected the announcement to be made soon.
The layoffs at Goldman and Kidder may not prove to be isolated incidents as speculation widens that further reductions are pending throughout the industry.
"A number of departments on the municipal side got somewhat overstaffed in late 1991, 1992, and 1993," said Perrin Long, an independent analyst who follows the securities industry. "Given that, and that business may not be all that good in municipal activity, it would seem logical" that cuts will be made.
Long said the bigger firms "will be the leaders" in workforce reductions, particularly as third quarter results come in.
"In all likelihood," the third quarter is going to mark a second consecutive quarter of downward results for many firms, Long said. As a result, "more and more management will be saying 'we can't sit around and wait, we've got to take the bull by the horns and cut more.'"
Charles Gasparino contributed to this article.
