Bonus row to flare up again
THE row over bonuses for investment bankers is due to be reignited this week, as Goldman Sachs prepares to announce a huge layout on pay, expected to be almost double the figure allocated last year.
The Wall Street investment bank unveils third quarter profits on Thursday, with analysts predicting pre-tax profits of $3.5bn (£2.2bn) for the three months to 30 September.
About $6bn of an expected $12bn in revenues has been earmarked for the bank’s compensation pool, which is expected to total around $22bn by the end of the year, due largely to stellar performance in fixed income.
By contrast, last year’s third quarter saw the bank set aside just $2.9bn for compensation, while its full year pay pool totalled $10.3bn.
The remuneration plans would see Goldman bankers, 5,500 of whom work in London, take home an average compensation package of $748,000, well above the average $363,000 seen last year.
Bankers at JPMorgan Chase are also likely to see their pay hiked, with the bank forecast to increase revenues by 68 per cent to $24.8bn in the third quarter, compared to last year.
Both Citigroup and Bank of America however, are expected to report third quarter losses on modestly improved revenues.
With the bonus row set to reappear, financial services minister Lord Myners has summoned the heads of investment banks with London-based subsidiaries to see him.
Myners hopes for an agreement from the executives ensuring bonuses are in line with a communiqué issued after last month’s G20 in Pittsburgh. It would be similar to a deal chancellor Alistair Darling struck with high street banks.