INVESTMENT bankers at Goldman Sachs are expecting a bumper year for bonuses on the back of soaring profits at the Wall Street firm, in a sign that there will be no end to bumper payouts for bankers.
The firm expects to book record profits for 2009, with revenues soaring due to dwindling competition and strong performances in fixed income and foreign currency.
Staff at the firm’s London offices were told last week that they could expect a large bonus on the back of Goldman’s success, barring a dramatic turnaround in the bank’s fortunes.
Goldman Sachs booked a first quarter profit of $827m (£500m) in investment banking this year, compared with the $2bn profit it made for the entirety of 2008.
The group said earlier this year that half of the $2.3bn profit booked by the group in the first quarter would be devoted to remuneration, much of it in the form of bonuses.
Nearly 1,000 Goldman bankers are thought to have received bonuses of more than $1m last year, but this year’s payouts could be even heftier, despite the firm’s decision to revise its rewards scheme.
The firm has moved from a system of guaranteed bonuses doled out after three years to sliding-scale payments dependent on staff staying with the firm. Profit-related bonuses will also be deferred by 12 months.
The scale of the payouts will fuel whispers that the much-vaunted curbing of the bonus culture has been a flash in the pan, with soaring profits at investment banking divisions putting paid to the chances of reform.
Barclays Capital, led by Bob Diamond, has already paid out around £600m to staff this year, as it recorded a bumper first quarter in which profits skyrocketed by 361 per cent to £907m.