GOLDMAN Sachs is likely to pay out UK bonuses in full, a decision which would force it to hand around $1bn (£620m) in taxes to the Treasury.
The bank looks set to increase the size of its bonus pool to compensate for Alistair Darling’s 50 per cent bonus levy rather than punish its workers by cutting their annual payouts.
Goldman is expected to pay out bonuses in the UK worth some $2bn (£1.24bn), meaning it would end up pouring around $1bn into the Treasury’s coffers.
That amount alone would eclipse the £550m that Darling said he expected to raise from the measure, which was announced in the pre-Budget report last month.
It is also understood that hundreds of back office staff at the investment bank will avoid the supertax, after the Treasury clarified what kinds of employees would be affected.
A Goldman Sachs spokeswoman would not say whether a final decision on whether to pay UK bonuses in full had been made.
She added: “We will not be commenting on this until we announce our fourth quarter financial results.”
Goldman’s decision to honour bonus payouts could embarrass the government, which is desperate to pander to public opinion on bankers’ pay.
The chancellor had hoped that most banks would rethink compensation policies when he announced the supertax.
But many US firms like Goldman feel they cannot allow massive pay differences to arise between staff working in London and New York.
Although it is planning to pay bonuses in full, Sky News reported that Goldman Sachs could still opt to make a political gesture by reducing the proportion of revenues it pays out in compensation in the final quarter.
At the end of the third quarter, the global compensation pool stood at $17bn, which was expected to rise to $23bn by the end of the fourth quarter.
But the full year figure could be much less if Goldman does decide to cut the compensation to revenue ratio.
The bank has made other pay reforms in recent weeks, and announced plans to pay global management committee bonuses in shares only this year, a decision that will affect chief executive Lloyd Blankfein.
City A.M. last month exclusively revealed that most banks were preparing to take the bonus tax on the chin instead of punishing employees.
Lloyds Banking Group is planning to pay bonuses in full, a decision which will see it hand around £100m in taxes to the Treasury.