The Telegraph reports that bankers at Goldman Sachs are set to receive huge bonuses after the bank is believed to have enjoyed a strong finish to 2012.
Goldman is set to unveil profits of $1.79 billion today for the last quarter of 2012. This will bring their total profits to $6.33 billion – up almost $2 billion (or just below 50%) from the profits that it announced in 2011. The reason for the surge in profits has been attributed to bond and share trading delivering better performances after stock market turbulence in 2011, when the bank suffered only its second quarterly loss since becoming a public company in 1999.
As well as operating profits of $6.33 billion, the bank is believed to be set to announce that the compensation pot for its employees is between $13.3 and 13.8 billion for 2008. This is an increase of over a billion and staff are due to find out today how much they will be awarded in bonuses for their performance in 2012. It was alleged earlier in 2012 that 95 of Goldman Sachs’ senior staff in their UK office received an average pay deal of £1.8 million in 2011. This prompted anger at the level of remuneration that banking staff receive.
Goldman are believed to employ over 5,000 staff in the City of London. These staff will find out later this month (on “Compensation Communication Day”) what the size of their annual bonuses are, with the cash element being paid shortly after.
The banking sector as a whole suffered in 2012, with a number of banks announcing losses and some banks being forced to offlay staff for redundancy. It was reported a number of days ago that FSA figures from 2012 showed a 6% increase in the number of “clean” withdrawals from the FSA register, with a substantial number of these withdrawals being for the reason of redundancy as banks cut bank on expensive labour costs. Morgan Stanley recently announced that it was cutting 6% of its investment banking staff (approximately 1,600 jobs).
The total amount of compensation being awarded to staff in bonuses has provoked outrage in some sectors. The banks are under institutional and political pressure to rein in the level of compensation being awarded to staff, with shareholders demanding a bigger slice of income.
There have been a number of high-profile claims for bonuses in the High Court and the Employment Tribunal, the most recent being the High Court case of Imam-Sadeque v Bluebay Asset Management.