Goldman Sachs today crashed to its first quarterly loss as a public company and slashed bonus payments for staff.

The once-mighty Wall Street investment bank reported fourth-quarter losses of $2.12 billion (£1.41 billion), its first loss since listing in 1999 against profits of $3.22 billion a year ago.

Chief executive Lloyd Blankfein also revealed total wages and bonuses for those staff still in a job of $10.93 billion, 46% lower than in 2007.

Blankfein and six deputies, including London-based Michael Sherwood, have waived their usually bumper bonus payouts for the year amid pressure on leading bankers to take responsibility for the financial crisis.

Goldman has axed 10% of its global workforce of 32,000 in recent weeks, including 600 of the 6000 staff at its London headquarters on Fleet Street.

Following the fourth-quarter loss, Goldman posted an 80% fall in profits to $2.32 billion for the year as it was hit by credit crunch-related writedowns and a fall in revenues as investment banking, trading and sales deteriorated. Revenues dived 52% to $22.22 billion.

Blankfein said: "Our results for the fourth quarter reflect extraordinarily difficult operating conditions, including a sharp decline in values across virtually every asset class.

"While our quarterly performance obviously didn't meet our expectations, Goldman Sachs remained profitable during one of the most challenging years in our industry's history. Our deep and global client franchise, experienced and talented people and strong balance sheet position our firm well for the year ahead."

It was the first quarterly loss since 1998, when the collapse of Long-Term Capital Management and the Asian debt crisis roiled markets.

Stricken rival Morgan Stanley is expected to add to the gloom tomorrow with similarly disappointing results. Analysts are expected losses of around $1 billion as it lays off 10% of its staff including 400 from its offices in Canary Wharf.

Both firms sacrificed their cherished status as investment banks in October to get access to $10 billion each of Government funds to help them through the worst financial crisis since the Great Depression of the 1930s.

Meredith Whitney, star analyst at US firm Oppenheimer, who correctly forecast many of the big US bank writedowns more than a year ago, said: "The big banks are going to be on life support for at least 18 months, if not 36 months. The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years."

The fourth quarter capped a disastrous year in which Goldman and Morgan Stanley lost more than two thirds of their market value. The turmoil at two of Wall Street's oldest and most respected firms underlined the depth of the crisis, which has seen the collapse of Lehman Brothers and emergency takeovers of Bear Stearns and Merrill Lynch.

David Dreman, chairman and chief investment officer of Dreman Value Management, said: "There's a more radical change in financial institutions today than there was in the early 1930s."