Bank Goldman Sachs reacts to bonus ire

Jan 22 2010 by Iain Laing, The Journal

WALL Street banking giant Goldman Sachs yesterday showed signs of bowing to public anger on excessive pay despite annual profits of £8.3bn.

The firm, which employs 5,500 people in the UK, paid £10bn in compensation and benefits for the year, 48% above 2008 levels. But Goldman said its share of revenues paid out in salary and benefits for 2009 was 35.8% – its lowest as a public company.

Revenues at the bank were just 2% below the record levels achieved in 2007, but total compensation and benefits were 20%, £2.5bn, lower than two years earlier, Goldman said.

Goldman Sachs took £6.2bn from the US Treasury at the height of the crisis but has since paid the money back, with taxpayers earning £865m on the investment.

The bank added that it had paid £4bn in corporate taxes during the year as well as contributing £309m from its pay pot to a charitable fund during the final quarter of last year.

Chief executive Lloyd Blankfein said the results represented a strong performance from the bank: “That performance, as well as recognition of the broader environment, resulted in our lowest ever compensation to net revenue ratio.”

He added: “Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liquidity to markets and by investing for our clients.”

Investment banks across the world have benefited from fundraisings by governments and companies as well as the recovering prices of stock markets.

Goldman’s trading revenues were significantly higher than the previous year at £21.5bn, driven by strong client-driven activity, while the firm is also well-placed to benefit from any upturn in takeover activity.

Chancellor Alistair Darling has placed a one-off 50% tax on bonuses above £25,000, although the bank declined to comment on reports that it was putting a cap on the bonuses of its UK staff as a result.

TUC general secretary Brendan Barber condemned the high level of bonuses at the bank.

He said: “Goldman Sachs wants us to believe that its bonus payouts are modest. But the truth is that we have set up an international welfare state for super-rich bankers.”