Goldman Sachs cuts pay as profits plunge 56pc

Goldman Sachs has been forced to slash pay as the turmoil engulfing the banking industry slammed revenues last year.

The bank has announced a 56 per cent fall in fourth quarter profits, earning only $978m (£636m) compared to $2.2bn (£1.4bn) for the same period last year.

The earnings report still beat analysts predictions, causing shares in Wall Street's biggest bank to rise 2.3 per cent in premarket trading.

As a result, the bank is cracking down on the cost of rewarding its bankers. The cost of paying them dropped by 21 per cent to $12.2bn.

That puts average pay at the bank at $367,000 for its 33,300 employees at year-end, a decrease of 14.7 per cent on 2010.

Earnings translated to $1.84 (£1.19) per share, compared to forecasts of $1.24 (£0.80).