Goldman Sachs reignites pay row with 46% rise

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[EvadingGrid]

Goldman Sachs reignites pay row with 46% rise - Times


Workers at Goldman Sachs have racked up an average $527,192 (£324,607) in salary and bonuses so far this year after the American investment bank made a $3.1 billion profit in the third quarter.

 Average pay for staff at the group, which employs around 5,500 staff in London, is 46 per cent higher compared to last year. The news is likely further to enrage taxpayers who blame excessive risk-taking by banks for the global recession.

 So far, over the first nine months of its financial year, Goldman Sachs has set aside $16.7 billion to compensate its 31,700-strong global workforce — a 46 per cent rise in the same period in 2008. The bank needs to top $21 billion to match the bumper bonus year of 2007.

 In the most recent quarter, covering the three months to September 25, Goldman Sachs ring-fenced $5.3 billion for salary and bonuses, which is a rise of 84 per cent in the third quarter last year.

[EvadingGrid]

The sharp rise in pay has been revealed amid the first criminal case of the credit crunch which is continuing today.

 Two Bear Stearns managers, Ralph Cioffi, 53, and Matt Tannin, 48, are on trial accused of securities fraud after their hedge funds imploded in 2007, signalling the start of the crisis.

 Global governments have pledged to stamp out risk-taking by banks and yesterday Goldman Sachs was one of a number of the world's biggest banks which signed up to new rules on bonuses agreed at the G20 summit in Pittsburgh last month.

 UK banks have already pledged to support the new rules, which will allow bonuses to be clawed back as well as the deferral of compensation for senior executives working in more risky areas over three years, with at least 50 per cent of the payment in shares or share-linked instruments.

 David Viniar, chief financial officer of Goldman Sachs, said that the bank was considering whether to raise the proportion of its compensation paid in equity, as other banks are doing in response to pressure to tie bonuses to banks' performances.

 "We've always paid a lot of our bonuses in stock, deferred and divesting over time, but we're looking at those programs and a decision will be made at the end of the year," he said.

 Mr Viniar insisted that Goldman Sachs, which has come under fire for its generous compensation just months after paying back a $10 billion taxpayer loan, was aware of the difficulties that ordinary consumers faced in the tough economic environment.

 "We're very focused on what's going on in the world, what's going on in the economic environment," he said. "But we're also focused on our franchise and being fair to our people, who we think have performed admirably through the entire crisis. That's something we're weighing up."

 Profits for the third quarter rose from $845 million last year. Although earnings were not as high as the $3.4 billion made in the record last quarter, they were ahead of expectations.

 Net revenues, excluding net interest income, was 105 per cent higher than last year at $12.3 billion. Revenue fell in investment banking by 31 per cent year-on-year to $889 million as clients held off on making acquisitions.

 Revenue from trading and principal investments, which includes trading done with the bank's own money, soared by more than 260 per cent to $8.8 billion as fixed income and equities performed strongly.

 The bank pulled back on the amount of risk it was taking in the market in the third quarter, cutting its daily value at risk (var) measurement. In the third quarter, the most that Goldman Sachs could have lost in a single day of trading was $208 million, compared to $245 million in the second half.

[Carl-Jones]

Its another decoy story! The majority of these bankers are just part of the system and this is how they get paid. Now, the Central Bankers, now that`s a different story....they print the money and set the rates....you can only build big buildings on BIG FOUNDATIONS....so don`t blame the brickie, blame the architect! As I keep saying and saying....this financial crisis was DESIGNED.

[luckee1]

Meanwhile I am trying to find a job, even minimum wage.  Whee this is fun!