Goldman’s blankfein in warning over cuts

The financial industry should not go "overboard" in cutting costs in reaction to current market conditions, the chief executive of Goldman Sachs has warned, a day before the bank

is poised to announce one of its smallest ever groups of new partners. Lloyd Blankfein Jim Watson | AFP | Getty Images "Our industry has a long history of letting too many people go at

the bottom of the cycle and hiring too many at the top," Mr. Blankfein told an industry conference in New York. (_Read More:_ The Immeasurable Risk European Banks May Be Hiding) His

words come as investment banks in the US and Europe are shedding thousands of jobs in the belief that tighter capital rules will render certain business areas uneconomic for many years even

if economic growth comes back. The UK has been particularly hard hit by the job cull amid lackluster growth in Europe and as banks retreat from whole business areas based in London.

Switzerland's UBS is abandoning some of its fixed-income trading operations and RBS is exiting its mergers and acquisitions advisory business. Mr. Blankfein added that Goldman Sachs is

attempting to walk a fine line between trimming expenses during the current downturn in the industry and having the necessary people and new technology to generate stronger revenues in a

recovery. While the bank is adding fewer partners than at its last round of partnership promotions two years ago, it has been hiring extra technology staff, Mr. Blankfein told investors at

the conference, underscoring the contrast between old-school investment banking and new technology-focused businesses. Goldman is expected Wednesday to of managing directors to its upper

echelon, according to three people familiar with the bank's partnership process. In 2010, the last time the bank made partnership promotions, 110 people were elevated, making a total of

475 partners. Goldman bosses met Tuesday to largely complete the list of new partners. The final number could go up and down by a handful of people, as current Goldman partners make

last-minute arguments for or against certain candidates. (_Read More:_ Goldman Sachs' Tell-All Tells Little) New partners will receive phone calls from Mr. Blankfein or Gary Cohn, the

bank's chief operating officer, beginning this morning. The selection process, which occurs every two years, will culminate around midday in a meeting where the names of new partners

will be announced on a rolling screen. The title of "partner" at the investment bank may be ceremonial – Goldman ceased to be a true partnership in 1999, when it first sold shares

to the public – but it comes with significant Wall Street prestige as well as a higher salary. The base salary for a partner is said to be about $900,000, excluding bonus paid mainly in

Goldman's stock. Investment banks are widely expected to cut bonuses this year. Mr. Blankfein on Tuesday emphasized the importance of new technology in executing trades on behalf of its

clients and in the bank's risk management processes. The bank has been rolling out new systems that allow it to calculate the impact of upcoming Basel III regulatory capital rules on

individual securities, Mr. Blankfein said. Goldman also started GSessions, an electronic trading system for corporate bonds, earlier this year, for instance. "We have continued to

invest in execution platforms across equities and fixed income," he told the Bank of America Merrill Lynch 2012 Banking and Financial Services Conference. "It is critical that we

continue to invest."