- Goldman Sachs plans second round layoffs.
- Aramco sells $8 billion in bonds to distribute profits
- Pandemic warnings from Powell and Lagarde
Goldman Sachs Plans Second Round Layoffs.
While pandemic suppressed employment in many sectors, layoff plans accelerated in the banking sector.
According to Bloomberg’s report, Goldman Sachs is preparing to take the second layoff step in the last 3 months. According to the information given to Bloomberg, the number of positions to be reduced in the second round will not exceed 400. In addition, according to the news, managers are preparing for larger layoffs in 2021.
Major US banks, including Goldman Sachs, announced that they would avoid massive layoffs early in the pandemic. The durability of the industry is decreasing as the coronavirus epidemic continues. With the epidemic, managers of banks began to reconsider their cost reduction measures. Goldman set a goal to reduce costs by more than $ 1 billion in January. The bank is examining how to achieve this goal.
There is a wave of layoffs in the global banking sector in 2020, led by European banks.
According to the latest reports, Banco Santander also plans to lay off 2,000 employees in its Polish unit. Dutch ING, another leading bank in Europe, plans 1000 employee reduction in the number of employees by the end of 2021. The British Barclays bank, on the other hand, aims to lay off 1,070 positions, mostly in technology and retail banking units.
If the pandemic continues, obviously unemployment rates might increase all around the world. The world is hopefully waiting for news from the potential two vaccines, that might change the future of many businesses and employees.
Aramco Sells $8 Billion in Bonds to Distribute Profits
Aramco, the world’s largest oil company, issued $8 billion in bonds to finance $75 billion of dividends payment. The company’s bond issue received a total demand of $50 billion. This decision was connected to the fall in the crude prices falling by 45% in the third quarter. As many of the businesses worldwide, Aramco was not an exception to be affected by the pandemic pressure
According to Bloomberg’s report, the company has sold a total of 8 billion dollars of bonds in five different tranches with maturities of 3, 5, 10, 30 and 50 years. The export, which was offered as 7.5 billion dollars in the first place, was increased with the demand. Leading banks for the bond issuance were Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Morgan Stanley, and NCB Capital.
Last year, the company made a $ 12 billion export, with more than $ 100 billion in demand for this export.
Aramco experienced a 45 percent drop in profits in the third quarter of this year, with falling oil prices. With the decline in profits, the company was unable to generate enough cash to pay dividends to the predominantly Saudi Arabian government.
Todd Schubert, Head of fixed-income research at Bank of Singapore, said about the topic: “Pricing looks reasonably generous, although it will undoubtedly tighten as the book builds. Investors are concerned about oil prices, particularly under a Joe Biden presidency. However, Aramco is such a low-cost producer.”
Pandemic Warnings From Powell and Lagarde
Fed Chairman Jerome Powell and ECB President Christine Lagarde issued new warnings on the spread and effects of the coronavirus outbreak. Coronavirus cases are increasing rapidly worldwide. The US in the second wave of the Covid-19 is getting nearly 150.000 cases per day.
Fed Chairman Jerome Powell warned that the increase in coronavirus cases harmed the recovery process in the US economy, and stated that the recovery slowed down.
Powell talked about the issue saying that: ‘’ He welcomed the vaccine news, but it is too early to predict the economic effects of these developments.’’ Powell also mentioned that there is “a long way to go” for the US to reach full employment.
European Central Bank (ECB) President Christine Lagarde said that ensuring that the economic crisis caused by the coronavirus pandemic does not evolve into a financial crisis is the biggest challenge for policy makers. It is being prevented, but still remains as a potential risk for the whole world.
Lagarde stated that the ECB will continue to focus on long-term bank loans with its 1.35 trillion euros urgent bond purchase program as its main policy tool. Stating that a vaccine that will be released in a short time will not change the current estimates of ECB, Lagarde noted that the bank already assumes that a medical solution in this direction will come in 2021.
ECB President Lagarde predicted that the first half of 2021 would be tough and predicted that pre-pandemic levels would not be achieved before the second half of the year.
To be mentioned that, if everything goes as planned, Moderna stated that they estimate to produce 100 million doses of vaccine by the end of the first quarter of 2021.
Moderna CEO Stephane Bancel said that the coronavirus vaccine will be ready for every US citizen by June. Sharing his predictions about the US return to pre-pandemic life in the summer of 2021, Bancel said, “I believe that anyone who wants vaccines in the US will have access to a safe and effective vaccine until Memorial Day.”