PAY AT Goldman Sachs this year is set to beat the boom levels enjoyed before the financial crisis, with thousands of employees on track to earn a record $770,000 each on average.
The prospect of bumper pay and bonuses at Goldman, which yesterday reported surging second-quarter profits and is a bellwether for Wall Street banks, is likely to reignite a fierce debate in the US over bankers’ pay.
Goldman yesterday reported record earnings of $3.44 billion (€2.46 billion) for the second quarter, up 65 per cent from the three months to May 30th last year, on revenues of $13.76 billion – figures that surprised even the most bullish analysts. If the bank maintains that growth, its staff could share total pay and bonuses of $22 billion.
Strong revenue growth in its fixed income, commodities and currencies business, and hefty underwriting fees from a slew of capital raisings underpinned a performance that may have ensured the bank retains a lead over its Wall Street rivals.
Lloyd Blankfein, chief executive, said: “While markets remain fragile and we recognise the challenges the broader economy faces, our second-quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise.”
The firm has earmarked $11.3 billion for compensation for the first six months of the year. If Goldman’s second-half earnings stay on track, the firm will pay out an average of $770,000 to each of its 29,400 employees.
Some US lawmakers were riled by the bank’s pay plans. Many in Congress believe Wall Street’s bonus culture encouraged excess risk-taking.
The bank’s success stems in part from its commitment to an investment banking industry where the remnants of several competitors, notably Bear Stearns and Lehman Brothers, have been absorbed into larger banks.
Revenues from equities trading doubled. Investment banking revenues also jumped. – (Copyright The Financial Times Limited 2009)
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