About 20 senior Goldman staff in London, working at executive director level in all the main sectors of the bank's activity - equities, mergers and acquisitions, fixed income and derivatives - were told yesterday that they will be millionaires by Christmas, earning bonuses closes to pounds 1m on top of their salaries. A few of the top business bringers have been awarded bonuses well above that level.
The 33 partners in London, who make up the elite of the privately owned investment bank, do not receive bonuses but rather a share of the profits which is credited to their capital accounts. This pays interest, but the accumulated amount can only be cashed in when the partner retires. The partners will have to wait until the end of the year before getting final notice of their share of the 1995 bonanza.
But the extent of the improvement in the bank's fortunes can be judged by the more than doubling of the firm-wide bonus for what Goldman calls its support staff.
This has risen to 20 per cent of basic salary, as against just 8 per cent in the exceedingly difficult 1994, when many of the US houses took a severe hit in the turbulent American bond markets. But both Goldmans and Morgan Stanley yesterday said that, while the bonuses reflect the marked improvement in investment banking fortunes, they are still some way off the heights reached in the frenzied bull market of 1993. In that year, firm-wide bonuses were 30 per cent of basic salary at Goldmans.
While the securities side of the businesses has struggled for much of this year to make its mark, the burst of mergers and acquisitions activity across Europe, and the high fees it has generated, has powered investment banking and the City back to the top of the high earning league.
All those houses with strong corporate finance departments are looking forward to a substantial jump in their rewards.