Morning:
14°c
Goldman workers to get £432,000 bonus after bumper profits
Jonathan Prynn, Consumer Business Editor15.10.09
Investment bank Goldman Sachs today sparked fresh outrage over City pay when it revealed that its staff are in line for salary and bonus payouts averaging £432,000.
But in what appears to be a deliberate public relations bid to defuse anger over mega-bonuses, the scale of the payments has been reined in. The year-end totals are now unlikely to be as high as hoped for by many of the 31,700 staff.
The Wall Street giant, which has around 5,500 employees in London, said it has put aside $16.71 billion (£10.28 billion) for “compensation and benefits” in the first nine months of this year following a storming increase in profits. If the financial markets stay buoyant until the end of the year Goldman's pay and bonus pool could top $22 billion (£13.5 billion).
The bank usually gives to staff in the form of remuneration around 50 per cent of all the revenues it makes, but in the third quarter this has been reduced to 43 per cent.
But the concession failed to win over critics of the bonus system. Liberal Democrat Treasury spokesman Vince Cable said: “This is money that was made at the taxpayers' expense. They have been handling vast amounts of government bail-out paper and the Government is paying them too much to do it.
“Since the collapse of Lehmans there has been too little competition so remaining banks have been making very fat profits at the expense of everybody else.” Goldman's third quarter profits were $3.19 billion (£1.97 billion) —higher than forecast — in the three months to the end of September. In comparison it made $810 million (£498 million) in the same period last year.
It is the second investment banking titan to reveal bumper profits this week, reigniting the row over rewards to workers widely blamed for causing the credit crunch.
Yesterday JP Morgan Chase said it had put aside $8.8 billion (£5.4 billion) to reward its bankers — about $354,000 (£218,000) per employee. Goldman has already repayed $10 billion of bail-out money this year.
Over the past five years its chairman and chief executive Lloyd Blankfein has received $91.3 million (£56.2 million) in salary and cash bonuses.
Reader views (16)
Do youll have any clue how an investment back works. Its not playing poker you know! You losers should go back to your 25k jobs and have a new additionly tax for stupidity.
- Rudy, London, UK
Andy and Chorlton,
Do some research please before mouthing off. Both Goldman and JP Morgan are US banks and both have paid off the TARP loans. In JPM's case they didn't want it in the first place but were forced to take it.
As for 'Government', which government exactly are you referring to? UK Gov (joke) has nothing to do with US IB's.
And for any of the muppets who think that every single employee of these banks will b recieving that headline amount, no. Most of it goes to the top players, ther rest get peanuts in comparision.
And, frankly, yes, please tax at 75% and watch London and consequently the UK, transform into a banana republic as business's move away.
- Sarit, Hong Kong
I have no problem with people being rewarded for achieving their objectives BUT not when they are only in a job due to a bail out with taxpayers money.I cannot stomach the pathetic weakness of all major Governments..Obama,Brown et al...who do not have the courage to legislate that the Banks can pay NO bonuses/salary increases until they have paid back their loans.The bonus monies should be used to fund services that the Bankers have helped destroy.Our Leaders are pathetic wimps who I assume keep in with the financial community so they can "crawl" into overpaid jobs when they are kicked out of power.Shame on them all!!
- Jasper Wainwright, Florida,USA
Bonuses of £432,000 in average was a "reduction" to improve PR? I bet the Goldman Sachs director of PR will get that amount in double for this ingenious strategy which shows a perfect insight about life on average incomes in the UK and associated majority sentiments. They are not just wasting the country's wealth, they are dumb as well!
- Donna, London
So all those promises made by various politicians last year when the economic meltdown happened, that these big bonuses were a thing of the past and would never happen again, were all just complete and utter baloney. It is a terribly sad state for this country but what I find even more sad, is that I am not in the least bit surprised. I remember reading all the stories last year that the big bonuses were over, it would never happen again etc etc blah blah blah and I knew even then, as I'm sure did many other members of the British public, that of course those very same bonuses would be back again this year. I agree that workers should get bonuses for work well done but c.£400,000 per person..?! It is truly gobsmackingly obscene and I agree with Richard from Welling - why can we not crack down on these financial parasites? For goodness sake, even the MPs are paying back their "bonuses". Why is the City constantly exempt from the hardships that the rest of the country, indeed the world, are facing?
- Stella, London, UK
The government won't mind much - they'll get their share through the 50% tax band.
- Frank, London
They got a bailout - and paid it back this year.
GS attract the best talent in the world and thats because they pay the best salaries and bonuses.
The higher rate tax bracket at 50% will hit them where it hurts if bonuses are paid after April 10.
Im changng careers to estate agency in 2010 - thats what they will be spending their money on - property.
- Ancient Wisdom, London, England
You are such a losers, guarantee if someone offer you losers a job you would take it..............go back to your 25k a year job
- Krishan Singh, Australia
God you lot are truely ignorant,if you actually knew how this supposed bonus is actually distributed , have any of you even set foot within an investment bank to comment????
- Adam, london
If it has been announced that payments have been "reined in" to an average of £432,000 (yes, that's certain to do the job of defusing public anger), it's simply likely that in order to pay staff what they really wanted to they find a way around actual payments; you know, luxury cars, holiday homes in the Maldives, private boxes at Premiership football grounds... The only surprise is that the banks expect their 'cutting bonuses' smokescreen to persuade anyone at all that actually cutting bonuses is what they are actually doing.
- Paul H, London, UK
Tax these bonues at at least 75%, maybe that will stop these absurd gifts of money to their employees while the rest of the nation struggles...Have the banks repaid the billions of pounds lent by the government? Companies that have not paid back this debt should be prohibited from giving gifts of cash outside of stated salary needs.
- Chorlton And The Wheelies, Wheelie land, London
Woo hoo!
- Gavin, London
Great, let us they start spending it immediately.
- Paul, London
So can someone clarify something for me.
This bank was bailed out by the goverment and have just posted 'x' in profits....is that before or after they've paid us back?
Also, if their star employees wish to complain that 'we've made the profit, we deserve blah blah blah' then should they not remember that had they not have been bailed out by the goverment using tax payers money then they wouldn't have had a job and so therefore not have been picking up their basic wage...
So the company that I worked for that went busto last year, am I entitled to a slice of what profit I made them? Becasue that would come in real handy becasue right now me, my wife, and 2 children are really struggling to get by becasue of what those plums did in the city!
- Andy, Richmond
They were bankrupt and the public baled them out. This money should be going into public services - like transport.
- Fred, London
So, it's clear that the pigs have their snouts well and truly in the trough of tax payers' money again. GS may not have received handouts directly but they have benefited from all the money sloshing about in the economy foolishly injected by our sleazy politicians and their BOE poodles. The argument that we can't crack down on these financial parasites today is as empty as those that were cynically advanced to defend slavery two hundred years ago. Let these firms go to another country - the bright young people they employ can then direct their talents and energy to more productive things. And this country will feel a whole lot cleaner.
- Richard Kennard, Welling
