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Goldman Sachs average pay and bonus to hit £500,000
Simon English, Hugo Duncan and Jonathan Prynn14.07.09
The age of the City mega-bonus returned today after investment bank Goldman Sachs unveiled £2 billion profits.
The Wall Street giant's 5,500 London staff can look forward to record average payouts of around £500,000 each at the end of the year from a global pot of £14 billion, the Standard has learned.
Senior executives working at the bank's European headquarters in Fleet Street will get bonuses of several million pounds each with the highest paid as much as £10 million.
Rivals such as Morgan Stanley, Deutsche Bank and Barclays also look set to pay bumper bonuses.
Critics said investment banks had “learned no lessons” from the mood of public outrage that followed last autumn's near total collapse of the world financial system.
Some MPs are demanding that bankers be hit with a punitive 90 per cent tax on bonuses. Vince Cable, Liberal Democrat Treasury spokesman, said: “This suggests that far too many people in the banking sector are going back to business as usual and appear to have learned no lessons from the past.” Critics claim the excessive risk-taking that caused the financial collapse was fuelled by lavish pay and bonuses.
The expected windfalls are bigger than forecast and come after Goldman's second quarter results smashed even the most bullish predictions.
Along with other investment banks it has profited from the turmoil in financial markets and the vast sums of public money that have been injected by governments to save them from total collapse.
The second quarter results showed that the bank made revenues of £3.8 billion from trading bonds and foreign exchange, £2 billion from trading shares, £450 million from underwriting fundraising by client companies. Overall revenues leapt 46 per cent to £8.3 billion.
The results mean the bank is making more money than ever before — apart from the bumper year of 2007 which came before the financial crash. The profits mean it will pay hundreds of millions in tax to the Government. Goldman typically distributes half of its revenues in pay and bonuses to staff. It has now set aside £7 billion into its bonus pool — and analysts say the pot should reach £14 billion by the end of 2009.
It comes just months after the bank accepted a £6 billion bail out from the US government. It paid back the money last month, freeing it to pay executives as it wishes.
Top earners in London are likely to include co-chief executives Michael Sherwood and Richard Gnodde, and head of European investment banking Yoel Zaoui.
All the surviving investment banks have benefited from the collapse of rivals such as Lehman Brothers and Bear Stearns. It emerged today that Goldman executives sold almost £431 million worth of shares in the bank following the collapse of Lehman Brothers last September.
Reader views (18)
Sure, Goldman 'saw the credit crunch coming'. They helped engineer it. And made a ton of money betting against the worthless junk they were peddling to pension funds, municipalities, and the rest of the 'dumb money'.
They're indeed very good at what they do - sucking money out of the general public and depositing into the hands of the select few.
They shouldn't be taxed, the management should be investigated and prosecuted for the largest fraud ever committed, thrown in jail and their assets confiscated.
- John, Toronto, Canada
Now if we could only put the G.S party in charge of the country we could say goodbye to boom and bust forever!!
- Mr S.Port, London
It seems we don't like profitable, successful organisations. No-one has to use Goldman Sachs' services. However, we do have to use public services run by a government that makes most of the banks look like angels. We should celebrate the fact that 1) GS is paying tax, 2) paying our citizens rather than having them living off state handouts (or working for the public sector - same thing) and 3) is not funded by the taxpayer. I agree, inequality is not always a great thing. However, mediocrity - such as what this country has become (and I'm English) always is.
- Djra, london
Great, I assume this is the start of interest rises and another cycle of boom and bust. Can someone tell me what they actually provide?
- Tonny, London
GS did not want the US govt bailout money in the first place, it was forced upon them by the former US Treasury secretary, Hank Paulson who had previously held the top post at GS. By persuading GS to take the govt bailout money, the US govt knew other banks would follow. They paid the govt money back. A lot of taxes will be paid by GS & it's staff at a time when tax reciepts have fallen. If you penalise them for making money by over taxing them, then you run the risk of them shifting their operations to less regulated tax regions. GS should be running the country, the UK govt has failed to run it. Shame the politicians, central bankers, credit agencies are not paid on a performance basis.
- Frank, Copenhagen, Denmark
Can we all jump on the bandwaggon?!
- Mark, kidderminster
These figures come out year after year after year and having worked for GS I can state that I have never received anything like whats stated in the press. The money stays with the bigwigs and the 'lower' graded staff often just come out with a pat on the back. An ex colleague of mine was rewarded with a £1500 bonus before tax and that was in a record year.
- Ag, east london
Goldmans are simply very good at what they do.Why not let them run the whole UK?
No doubt it would be so profitable, we'd hardly need to pay any tax at all.
- Stewart Robertson, Wimbledon
Wen - Oxon
if you had even bothered to read the article or any else written on the matter, you will note that GS paid back the US loan many months ago. You will also note that GS were forced by the US Govt to take the loan and never requested it.
- Martin_Clerkenwell, london
Goldman Sach paid back all money plus interest foisted on it by the US government. Goldman saw the credit crunch coming and took precautions. The idiot banks like RBS et al that needed to be rescued by the UK government are not making these profits or paying bonus's. The idea that Goldman has to somehow wear a sackcloth and pretend that they are not outstanding at what they do is just plain stupid. They achieved these results despite sharply reduced leverage, an outstanding performance. Any attempt to impose a confiscatory tax will simply be the biggest own goal ever by a government, pathetic socialist losers. The credit crunch was caused by reckless lending and borrowing by Joe Public egged on by the morons running the country. Yes the investment banks packaged this garbage and sold it on which meant it was hard to establish exactly what liabilities each bank had. It should be noted that for every dollar earned by by Goldman and paid to its employees the UK government takes over 50% in income tax plus unlimited employer national insurance ... over 60%!! On retained profits thtey pay 30% corporation tax ... so adding it up the UK government takes over 60% of Goldman Sach pretax profits!! The punitive tax brigade should shut up and be gratefull that this money is there to pay for the "benefits" ...
- James Macleod Ritchie, Oyster Bay Cove
Here we go again! What have they actually made money from? Taxpayers bailing them out in the US and UK. Banks should not be allowed to trade physical commodities period. In 2008, 75% of all positions on oil were speculative. This is despite lower demand and higher production!
- Darren, london
Reuben, why should they be charged such a high rate of tax?
- A, Lon
Wen - Goldmans played by the rules and repaid every cent of the bailout money they took, so they are free to do what they like, unpalatable though it might be.
- Edward Thompson, Bedfordshire
Obscene! Tax them until the pips squeek.
- Tony B, Putney
To say an average bonus of £500000 is meaningless. The most senior will earn millions but what will the bulk of the staff get. If they all do relatively well out of it, proportionally shall we say, then there is something deeply wron.!
- Gordonbay, London and Cape Town
It has it's price: of all the companies I worked for in the City, theirs had the second most poisonous atmosphere . . .
- Roz, France
TWO BILLION POUNDS PROFIT IN JUST 12 WEEKS.
I heard Gormless Brown and Dizzy Darling (him with the black stick on caterpillar eyebrows) tell the world they were going to STOP these obscene profits and all bonus payments to parasitical bankers.
Now the greedy selfish bankers are to get on average OVER GBP400,000.00 BONUS PAYMENTS.
THEY SHOULD BE TAXED AT 99% ON ALL BONUSES.
- Reuben Camara, Republic of Morecambe, UK
Surely they should be paying back any profits to the US government who bailed them out?
- Wen, Oxfordshire
