The investment bank will probably have lower bonuses at the end of the year.
(Photo: Reuters)
new York Traders at US investment bank Goldman Sachs are on track to post their biggest return in more than a decade. Still, the Wall Street bank plans to cut its year-end bonuses in a bid to cut costs.
Executives at the bank’s global markets division may have learned this week that their compensation pool is set to be reduced by a low double-digit percentage, according to Bloomberg. This is offset by the above-average performance of the department.
Goldman’s annual trading turnover is poised to surpass $25 billion. Analysts estimate that the bank will exceed last year’s level by 15 percent. According to informed circles, the compensation plans could still be adjusted. A spokesman for Goldman Sachs declined to comment.
Goldman is in a special position this year. Bank CEO David Solomon and President John Waldron are trying to ensure the company’s profitability after the consumer business generated higher-than-expected costs.
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Meanwhile, the global downturn is weighing on businesses such as Deals. Solomon scaled back his Main Street aspirations in October, which was welcomed by the stock market. Goldman’s return on equity for the first nine months was 12 percent. Top management wants to prevent the profitability measure from falling.
Bonus pools may also be adjusted for other Goldman businesses. Investment banking could go down even more sharply than its competitors. Here the bonuses should drop by a quarter. A few hundred bankers could even get nothing at all.
On Wall Street, bankers who advise on mergers and acquisitions are likely to see their bonuses fall by as much as 20 percent this year. That’s according to a report by compensation consultant Johnson Associates last month. The bonuses of their underwriting colleagues could even drop by as much as 45 percent.
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