Goldman Sachs Group Inc. (GS) has stopped offering two-year contracts to its most junior investment bankers, typically new college graduates, ending a quarter-century practice, a company spokesman said.
Analyst-level recruits at Goldman Sachs’s investment banking and investment management divisions for 2013 aren’t receiving the contracts, which typically ended with either a job offer at the firm or a move to graduate school or another company, said David Wells, a spokesman in New York.
“We will continue to provide the skills and time needed to understand our hiring and developing the careers of analysts in our banking and investment management divisions,” Wells said. “Making this change allows us to emphasize the longer-term career opportunities available at the firm.”
Two-year contracts will continue to be used for analyst- level employees in the sales and trading and research divisions, Wells said. He declined to say how many people are employed in the analyst programs. The Wall Street Journal reported the recruitment policy change earlier today.
Wall Street firms have been seeking ways to reduce employee costs, even at the most junior levels. The practice of providing junior bankers with automatic annual pay increases came under review at firms including Credit Suisse Group AG (CSGN) and Goldman Sachs earlier this year, people familiar with the deliberations said in January.
Goldman Sachs, the most profitable securities firm in Wall Street history before converting to a bank in 2008, employed 32,300 people at the end of June, down 9 percent from a year earlier, and said in July it planned to cut more costs.
David A. Viniar, Goldman Sachs’s chief financial officer, said on a July 17 conference call with investors that the firm expected to reduce “people-related” expenses by about $500 million by shifting to a “more junior and less senior weighted head count going forward.”
Goldman Sachs fired some analysts last year for accepting jobs outside the firm before they were allowed to seek other employment, the Wall Street Journal reported, citing unidentified people familiar with the matter.