Goldman defies public fury with another £10bn bonus payout

Goldman Sachs, the mightiest of the world's investment banks, will reveal a new round of bumper bonus payouts this morning that is expected to average at around $450,000 (£280,000) per person, demonstrating that another year of public fury at bankers' pay has failed to change behaviour on Wall Street and in the City of London.

The bank is likely to confirm that its latest annual bill for pay, perks and end-of-year bonuses is around £10bn.

Politicians on both sides of the Atlantic have watched impotently as banks continue to pay out giant bonuses, in some cases returning close to the levels seen before the market meltdown of 2008 and the government bailouts that kept the financial system running.

At Goldman, the peak year for bonuses was in 2007, when the average pay for its global workforce reached $661,490. Now, despite extensive Wall Street reform designed to restrain the excesses that led to the credit crisis, Goldman and others are again posting near-record profits, and handing staff a large slice of the proceeds.

The announcement of Goldman's annual figures for 2010 will be the centrepiece of the earnings season, and the most important measure of the health of the financial sector, because the bank dominates trading and has become a lightning rod for public and political concern over Wall Street practices.

Last year, in a move aimed at heading off some criticism, it unexpectedly pulled money out of the bonus pool for staff in the final months of the year, keeping average bonuses below the psychologically important level of $500,000 (£313,000). No one is expecting a similar gesture this year, as competition for staff has hotted up on Wall Street.

After the first nine months of 2010, Goldman had put £8.2bn aside for pay and bonuses. Analysts are expecting the final amount to come in only modestly below the previous year's total of £10bn. Goldman bankers, on average, earn more than 10 times the national average income in either the UK or the US. The continuing high level of bonuses comes despite recent declines in trading activity on Wall Street, which has meant that few banks are expected to post record results.

Goldman has had to fight to repair the damage done to its reputation by political attacks, public anger over bonuses, and fraud charges that were laid against it last year relating to its conduct in the mortgage market before the credit crisis.

To the wider public, the bank has become viewed as "a giant vampire squid, wrapped round the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" – in the memorable phrase of the Rolling Stone magazine journalist Matt Taibbi. And on Wall Street, the company's clients have begun to believe that Goldman cares more about making a short-term profit on its own investments than it does on helping them do business, according to the results of secret research commissioned by the bank.

Last week, Goldman published a 63-page report promising to overhaul its internal procedures and improve ethics. It proposed "increasing emphasis on evaluation criteria relating to reputational risk management in the firm's annual performance review and compensation and other incentive and recognition processes" – in other words, to tie bonuses more clearly to ethical practices.

This morning's results from Goldman, which has promised greater transparency, will also be notable because they will be the first to include specific details about how much money the bank makes from trading its own money, as opposed to working on behalf of clients.

Bank forced to pull $1.5bn Facebook share offer

Goldman Sachs has had to exclude US-based investors from a special $1.5bn (£930m) investment opportunity in Facebook.

It was reported earlier this month that the bank was looking to raise $1.5bn for Facebook through an exclusive share offer, known as a private placement, for the bank's top clients. In a statement, the investment bank said that "intense media coverage" had prompted its decision to pull the offer from US clients.

The "special purpose vehicle" set up by Goldman Sachs had been seen as a way to circumnavigate rules set out by the United States' Securities and Exchange Commission (SEC) that if a private firm has more than 500 shareholders, it is required to register and file public statements.

The Goldman statement said: "We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take." The move is a blow to Facebook and an embarrassment to Goldman, which had reportedly received orders totalling $7bn for the $1.5bn it was hoping to sell.

Tom Peck

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Caroline Proust as Captain Laure Berthaud in 'Spiral'
tvReview: Gritty, engaging and well-acted - it’s a wonder France’s biggest TV export isn’t broadcast on a more mainstream channel
Arts and Entertainment
music
Arts and Entertainment
Laura Carmichael in still from Madam Bovary trailer
film
News
i100
Sport
Serena Williams holds the Australian Open title
sportAustralia Open 2015 final report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links
Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing