Last-quarter drop will hit Goldman staff payouts

Goldman Sachs posted a rare set of disappointing financial results yesterday, and signalled that the investment bank's average employee would be getting a 13 per cent lower bonus this year.

With trading activity slumping across Wall Street in the final months of 2010, Goldman said that its fourth- quarter profit more than halved to $2.4bn (£1.5bn). Revenues were below analysts' forecasts, and Goldman Sachs's shares fell in early trading in New York yesterday.

The bank did still top up its bonus pool to the tune of $2.3bn, taking its total annual bill for employee pay, perks and year-end bonuses to $15.4bn. That works out to average compensation of $430,700 for each employee, down from $498,246 a year ago, but still large enough to provoke public anger.

In the UK, Brendan Barber, the TUC general secretary, said the payouts would "make Gordon Gekko blush". Demanding that George Osborne, the Chancellor, make good on Coalition promises to tackle unacceptable bonuses, Mr Barber added: "Bankers are toasting their telephone digit bonuses while the rest of the country reels from more than a fifth of young people being out of work. This Government is overseeing a fast return to the worst excesses of the 1980s."

Goldman said yesterday that it had paid $465m in UK bank payroll tax, the one-off 50 per cent tax on bonuses above £25,000, that was payable between January and April last year.

It generated net revenues of $39.2bn and net earnings of $8.4bn for 2010, despite what it called a challenging operating environment. By the end of the year, revenues were sinking in all parts of its business. Investment banking revenue, based on advisory fees from merger and acquisition deals, was down 10 per cent in the fourth quarter, and analysts were particularly disappointed in the performance of the fixed-income, currency and commodities trading business, where client business generated $1.6bn, down 48 per cent on the fourth quarter of 2009.

"Across the full year, the competitive landscape got much tougher," said David Viniar, Goldman's chief financial officer. "And clearly, in the month of December things were just dead. There was just very little activity."