Goldman bonus pool shrinks, but no layoffs

Staff at Goldman Sachs have been put on notice to expect more cuts to their bonuses this year, after the bank slashed payments to its bonus pool in the first three months of 2012.

The company set aside $4.4bn (£2.7bn) for employee compensation in the first quarter, down 16 per cent on the same period last year, reflecting a decline in revenues of the same percentage.

But the bank's chief investment officer, David Viniar, also said he did not expect to lay off any more staff, unless the global economic outlook took a turn for the worse. The bank now has 32,400 employees, down 3,000 on a year ago.

Goldman's results reflected reduced activity on Wall Street, in the City of London and across other financial centres compared with the previous year, the result of caution on the part of investors and new regulations designed to protect financial stability. However they also showed a significant pick-up from the second half of 2011, when the bank plunged into the red for only the second time in its history as a public company.

Net revenues were $9.9bn. Profit was $2.1bn, down from $2.7bn in the first three months of 2011. Revenue from its biggest business – trading in bonds, currencies and commodities – was down 20 per cent, but was double the figure for the previous quarter.

Lloyd Blankfein, Goldman's chief executive, said: "Because client activity remains relatively low in certain areas, especially in parts of investment banking, we believe that our mix of businesses gives the firm significant room for revenue growth as economic and market conditions continue to improve."

The first quarter has been another dramatic period for Goldman, whose reputation was tarnished by the very public resignation of a derivatives trader in London, Greg Smith. Mr Smith wrote an opinion piece in The New York Times that alleged the bank viewed its clients as "muppets" and routinely ripped them off.

Attracting almost as much comment on Wall Street, the bank has suffered a string of less public but more senior resignations, now totalling more than 50 senior partners. Those departures were "catch-up", Mr Viniar said, after Goldman saw fewer than usual partner retirements in the previous four years, because people wanted to show loyalty to the firm in a difficult time.