Goldman Sachs, the US investment bank which this week retreated from a proposal to delay UK bonus payments to gives its bankers the benefit of lower tax rates, today said it was spending a smaller slice of its revenues on paying employees – but high earnings and cutbacks in the headcount meant the average Goldman banker would book nearly $400,000 (£250,000) for 2012.
The figure, up 6 per cent on pay and bonus deals for 2011, came as the bank said it had nearly tripled its net income in the fourth quarter of 2012 to $2.89bn from just over $1bn a year earlier.
But even as it made more money, the bank, which was boosted by investment gains, revealed it had set aside around 38 per cent of 2012 revenues for compensation, among the lowest in proportional terms since the bank began life as a public company more than a decade ago. Still, the record earnings, along with a series of layoffs as the bank turned its attention to cost-cutting, meant its legion of just over 32,000 bankers made more than they did in 2011, when the average pay and bonus package stood at about $367,000.
"While economic conditions remained challenging for much of last year, the strengths of our business model and client franchise, coupled with our focus on disciplined management, delivered solid performance for our shareholders," Goldman's chief executive, Lloyd Blankfein, said.
The response on Wall Street was positive, with Goldman's stock up nearly 4 per cent in early afternoon trading.
Separately, the US Federal Reserve said it had reached a deal with Goldman and rival Wall Street bank Morgan Stanley in a foreclosure inquiry. The banks will pay a total of $557m to mortgage borrowers, in a deal similar to the $8.5bn pact announced between regulators and 10 other banks and mortgage servicers earlier in the month. Under today's deal, $232m will go directly to eligible borrowers, while another $325m will be spent on loan forgiveness and modifications.