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Goldman: Pay and bonuses of £269,000 per head

Robert Peston | 14:22 UK time, Wednesday, 19 January 2011

The story at Goldman Sachs is that net earnings have fallen by a considerable amount, 38%, to $8.4bn (£5.3bn), and net revenues have dropped by 13% to $39.2bn (24.5bn)

Goldman Sachs booth, New York Stock Exchange

But "compensation and benefits" (largely pay and bonuses for staff) has been reduced just 5% to $15.4bn. The ratio of compensation to revenues has risen from 36% to 39%.

Which some will see as the bankers doing considerably better out of the firm than the owners.

That said, 39% of revenue is still lower than Goldman has often allocated to pay and bonuses in the past (which is what I'm sure they'll say when they ring me about this post - so perhaps I am saving Goldman the cost of a phone call).

Average pay per head (which includes bonuses) for Goldman 35,700 employees was $431,000 (£269,000) for 2010. So less than last year's $495,000 but - most would say - not too shoddy.

And remember that this figure for average pay should not be seen as saying anything terribly informative about typical pay at the firm, because variations in rewards are so pronounced. At the top, there are 475 partners who take home millions of dollars each year.

Also, in addition to the remuneration disclosed today, Goldman's executives have shared a $3.5bn windfall from stock options granted to staff at the end of the 2008, according to an analysis published in today's New York Times.

What does it all mean?

First, the substantial rewards for Goldman's people will reinforce the case of the boards of Barclays and Royal Bank of Scotland that they too must pay big bonuses - or risk seeing their better people defect.

Second, it is pretty clear that Goldman has come through a turbulent year in good shape (including ending 2010 with a ratio of equity capital of 13.3% under the old rules - which makes its balance sheet reasonably robust, though not an absolutely unbreakable fortress, to use the cliche).

Note that this is the year when Goldman paid $550m to the US regulator, the Securities and Exchange Commission, to settle a case of alleged fraud in the sale of an issue of collateralised debt obligations - and when it was pilloried by many senior members of Congress for perceived shortcomings in the way it conducts business.

It was the year when Goldman paid $465m in a one-off bonus tax to the UK exchequer.

And 2010 was the year in which it had to start reconstructing its business in a fundamental way, to eliminate some of the conflicts of interest perceived by its critics and to get out of proprietary trading (which has historically been very important to Goldman, but which has been banned for banks by a US reform known as the Volcker rule).

So many would say that the rise in Goldman's share price over the past year, and its continued claim to be the global leader in investment banking (albeit facing stiffer competition from the likes of JP Morgan, Morgan Stanley and Barclays Capital) is no mean achievement.

That said a few of you would probably argue that the Goldman hegemony is great for Goldman partners, though not necessarily for the world.

Update 1620: I thought you might find these two responses to my post diverting.

The first is from Goldman Sachs:

"You might note that comp and benefits per employee (at £269,000) fell 14% year on year, in line with the decline in revenue. The reason total comp wasn't down in line with this is that we increased headcount by 10% over the past year, or an increase of 3,200 people, mainly in Growth Markets, Investment Management and Technology."

The second is from a City chum:

"The top 20% in an investment bank scoop 80% of the pot, so the more interesting number is £1.3m per head for the bankers (as opposed to the doormen, security guards, receptionists, waiters, cooks, electricians, personal assistants, IT staff, accountants and researchers etc etc). And on the basis of an 80/20 split of that pool, there was £5m plus for the 220-odd senior folk in London."

Comments

Page 1 of 4

  • Comment number 1.

    Shame. Shame. Shame.

  • Comment number 2.

    Ah - these are the people RBS-temp is talking about when he says...

    "the clever investors make money on the way up AND the way down"

    Betting against your clients is always rewarding.

    I say let them carry on paying their bonuses - it's only helping the cause move on by leaps and bounds.

    I'm sure we'll get it all back when we get our 'profit' from the 'stake' we took in the 'banks'.

    N.B.
    'profit' - because we're never getting one
    'Stake' - because a bailout isn't like making a choice and 'taking a stake' in a company
    'banks' - well I think the last 2 years speak for themselves!

  • Comment number 3.

    The argument concerning bank bonuses seems to be centered upon the fact banks, either directly or indirectly, received state aid and therefore remuneration should be cut.

    Is there any other example where an organisation or group of organisations have received state aid and consequently the remuneration to the workers within those organisations has been cut?

  • Comment number 4.

    After watching your broadcast last night and hearing the views of experts on banks, bankers and their pay you really can't make this stuff up. We need a revolt from bottom up to ensure a fair and equitable system that serves all of society and not the elite few. Time for change before it turns ugly.

  • Comment number 5.

    Robert, I don't believe the accounts - why do you?

    Goldman's could have almost any figure that they desired as a 'profit' (or indeed loss) under the current rules.

  • Comment number 6.

    'The ratio of compensation to revenues has risen from 36% to 39%.'


    While the rest of us are taking a 3% reduction in the value of earning... http://idseye.com/2011/01/19/earnings-growth-of-2-1-while-inflation-heads-for-5/

  • Comment number 7.

    Has any of the huge 5% fall in pay and bonuses been achieved by reducing staff numbers???

  • Comment number 8.

    "Note that this is the year when Goldman paid $550m to the US regulator, the Securities and Exchange Commission, to settle a case of alleged fraud in the sale of an issue of collateralised debt obligations - and when it was pilloried by many senior members of Congress for perceived shortcomings in the way it conducts business"
    -----------------------------------------------------------------------------
    They must have made a huge profit on this fraud to settle for a $550m fine to the SEC,

  • Comment number 9.

    The average of £269,000 means some perhaps a lot have received fantastic pay out. With these figures staff at G/Sachs wont be leaving soon so it is not so necessary for other banks to match these outrageous pay outs. All this in the face of evidence of mal-practice and dishonesty. Robert why not find a few larger individual shareholders and ask them what they think. Why not interview the chair and members of the remuneration committee and ask them to justify the top end bonuses and pay in the light of the less than astonishing performance of the company. Also find out who in G/Sachs is going to pay any tax at the rate of 50%.

  • Comment number 10.

    This looks like a copy of the HMV top brass filling their boots before the administrators move in :-)

  • Comment number 11.

    Ah! Banks...........Banking business model is to give out brollies when the sun is shining and ask for them back when it starts raining. Don't you just love 'em?

  • Comment number 12.

    We're all in it together.

  • Comment number 13.

    High bonuses at Goldman don't mean that Barclays must pay the same. They may mean that Barclays must pay as much to their few very talented people. Paying less to the rest might be a good way of encouraging them to move.

  • Comment number 14.

    I'm quite relaxed about bonuses in theory but the problem is that they are shared iout so unfairly. All a company's employees have a part in making any profit for the bank therefore why not have a ruling that bonuses can be paid at any level set by the board but must be paid as the same percentage of earnings to all employees. So the bank simply sets a bonus at say 10% (or whatever level it decides) of annual earnings payable to all employees. If a board goes against this principle then government could have powers to tax bonuses at a rate which would discourage uneven bonus structures! e.g 80%+ of any bonus

  • Comment number 15.

    "That said a few of you would probably argue that the Goldman hegemony is great for Goldman partners, though not necessarily for the world."

    So it seems you do read the responses here and understand the depth of feeling amongst us, although I'd argue it's not just a few but the majority, with only a rather deluded amalgamation of banker apologists, arch capitalists and sociopaths who think any differently.

    Even putting aside our more wild conspiracy theories and paranoia regarding the nature of the financial community, can ANYONE honestly say the world is any better off for the existence of GS? Does anyone truly believe that mankind is enriched by the activities of such an entity? Could it possibly be that we, as a worldwide community, might actually be in a better position without this completely unproductive parasite sucking the lifeblood out of the global economy and getting fat and arrogant on the proceeds?

  • Comment number 16.

    6. At 15:41pm on 19th Jan 2011, copperDolomite wrote:
    'The ratio of compensation to revenues has risen from 36% to 39%.'


    Which interestingly sets the bench mark for people like Barclays and RBS. I wonder what their ratio of compensation to revenues will be in the investment bank division.

    The other way of looking at it is that ratio is very conservative compared to football clubs and broadly comparable to most large service sector firms (lawyers/accountants etc) which tends to indicate that it is not particularly excessive.

  • Comment number 17.

    Oh dear.

    Banks doing well is bad....they're all greedy swindlers.

    Banks failing to do well is bad....us poor shareholders may have to support them.

    Banks doing OK but not amazing (like GS in 2010) is bad....but we can't think why other than that they're paying people more money than we get paid so we don't like it.

    I'm a shareholder in GS, so I want them to do well so my investment goes up. I want them to hire the best people. I want them to keep the best people and so I want them to pay them the necessary amount to keep them out of the clutches of hedge funds. My main concern isn't that they've reduced compensation by "only" 5% - it's that they may have cut it too much & that they lose key players as a result.

    So, as an owner (albeit a very small one) in GS, the implication that I may be unhappy because the people take a large part of the revenue is completely inaccurate. It's an intellectual capital business. The people make all the difference. Underpaying will just destroy the business (a la RBS).

    Go Goldman.

  • Comment number 18.

    3. At 15:26pm on 19th Jan 2011, Simon in Cornwall wrote:

    "Is there any other example where an organisation or group of organisations have received state aid and consequently the remuneration to the workers within those organisations has been cut?"

    The car industry was bailed out and pay negotiations were part of that as I understand it (after bailing out BL eventually they all paid with their jobs) - however as this involved 'unions' and not fascist bankers then I guess it's a different kettle of fish - no?

    State run institutions are under constant scrutiny for their wage levels (I mean several daily and sunday papers are committed to it) - what a shame none of these privately owned loss making papers run by oligarths bothered to look into bankers renumeration and falability.

    I wonder why....?

    To be fair it's quite a loaded question - most failed private industries get nationalised and not bailed out where they retain control. At which point all renumeration is brought into question - because the Government are in charge.

    I can't remember any industry receiving Government aid which wasn't under national control previously - only in a state of Fascist cronyism would the bailing out of private industries without taking control, be acceptable.

    The bankers should stop moaning and count themselves lucky - the alternatives were Economic chaos (as the house of cards fell) or retribution from the public who probably aren't too interested in 'talking things through'.

  • Comment number 19.

    I am writing this after watching RP’s ‘to big to save’ documentary. First things first your putting a bit of weight on Mr P. And also knowing that it will be part of your blog in the next few days?

    My basic headline statement is; I agree and I hope others will start to listen.

    I thought the bookmaker analogy was excellent but bookmakers only layoff when they need to, not as a matter of policy. It could be said that a bookmaker plans to win whereas the ‘banker’ plans to loose but make on the layoff? Notice I am using layoff as a term and therefore more easily understandable! And who thinks the odds are not in favour of the bookmaker winning?

    Many times I have argued that at the root of the problem is securitisation and nothing in the program as altered my view. What I did not know or comprehend was to the extent of it’s effect upon the banks balance sheet. I got the feeling that the program alluded to them some how being on a side balance sheet? i.e. on when it needed to and off to suit all other eventualities.

    And then comes the widely misunderstood FRB were in theory the banks only keep enough money to satisfy it’s maximum need for any given moment in time. This percentage should be individual to each bank but ordained by equation (which should include a percentage for error and breathing space), with this equation being amended to suit on a regular basis. If you understood my previous paragraph above you can see how some of the skulduggery as taken place.

    This leads onto; have the banks actions been inside or outside legislation and or regulations? It is all going to rest on ‘intent’ and from what the programme said or implied was that there was plenty of intent but with limited speculation on the consequences. This I believe constitutes misconduct by the directors which leads me to question the conduct of the FSA.

    I also think that the programme was a ‘call to arms’ and this is something I have shouted for sometime. I do not want to see running battles, that’s a fools game and it only degrades the objectives. Live by the sword and die by the sword does not mean if you kill you should be killed but in this case it means: money.

    So! What should we (Joe Public) do? From my previous paragraph, logic dictates starve them of what they live for and crave – their god: money! If their bonuses are contractual we cannot stop them, the courts will see to that under archaic Romanic common (contract) laws. The only option therefore is for ‘Joe Public’ to act with their feet and move their money away, to what extent the implications of the action is to achieve is up to the individual but if it’s going to happen sometime in the future it may as well happen now and get it over and done with. The quicker this happens the quicker we can all get on with life because the rebirth as got to de better than today? Capitalism as always been part of society it’s just lost it’s way thanks to a minority of individuals that see money as their god and that it is the be all and end all of their future happiness.

  • Comment number 20.

    5. At 15:37pm on 19th Jan 2011, John_from_Hendon wrote:

    "Goldman's could have almost any figure that they desired as a 'profit' (or indeed loss) under the current rules."

    This is true John - I in fact became a millionaire last night when I 'revalued' my broken biscuit collection at an astounding £4 million. However this morning SOMEONE broke into the tin and scoffed the lot - and now I am destitute and poor.

    I am not deterred however, today I intend to corner the market in Garibaldi's and make it all back.

    Mark to fantasy - life would be so much easier if we could all play along...

  • Comment number 21.

    I'm sure when the financial collapse does happen we might all wake up and wonder how and why we let the wall street/ square mile/swiss bankster dominated governments subsidise these corrupt financial institutions so they can continue to live the high life whilst we financially enslaved ourselves and future generations to work to pay off the endless debt to the privately owned central banks and the mega banks. But i'll be far too late then.

  • Comment number 22.

    10. At 15:48pm on 19th Jan 2011, creditunionhero wrote:

    "This looks like a copy of the HMV top brass filling their boots before the administrators move in :-)"

    YEEE HA! - Capitalism at it's most obscene. Wasn't Goldman Sachs rescued by Warren Buffet AND the US Government?

    So in 2008 they are 'near collapse' but in 2011 they're singing the good times again. Either this is the most remarkable (and isolated) recovery in history - or it's all FAKE.

    I wonder what the investors think......or are they now in too deep to make any noises that might 'rock the boat'.
    Silence through complicity - what an excellent situation - I'm so pleased we have the free speech which allows the shareholders to speak their mind

  • Comment number 23.

    Mr. Peston. It is very thoughtful of you to try and save Goldmann Sachs the cost of a phone call. After all, a penny saved is a penny earned. And we are all in this togther are we not? Though some of us are more 'in it' than others.

  • Comment number 24.

    13. At 16:01pm on 19th Jan 2011, mullecon wrote:

    "High bonuses at Goldman don't mean that Barclays must pay the same. They may mean that Barclays must pay as much to their few very talented people. Paying less to the rest might be a good way of encouraging them to move."

    I don't want to sound pedantic but.....the people at Goldmans who are getting the bonuses are the same people who brought the company to the brink of collapse.

    Doesn't that ring any bells anymore? They haven't sacked a single person - nobody has been held accountable, the CEO is going mad thinking he's doing God's work and the shareholders and clients are all footing the bill (oh and some taxpayer money too)

    It's like being in a parallell universe where everything that is right is wrong - and vice versa.

  • Comment number 25.

    9. At 15:47pm on 19th Jan 2011, watriler wrote:

    With these figures staff at G/Sachs wont be leaving soon so it is not so necessary for other banks to match these outrageous pay outs.

    ---------------------------------------------------------

    They will have to better them if they want to attract any revenue producers from GS.

  • Comment number 26.

    16. At 16:14pm on 19th Jan 2011, Justin150 wrote:

    "The other way of looking at it is that ratio is very conservative compared to football clubs and broadly comparable to most large service sector firms (lawyers/accountants etc) which tends to indicate that it is not particularly excessive."

    Oh you do talk some tripe.

    Once again the justification of the bankers bonus is not "look what I have achieved to earn it" - but rather "everyone is doing it"

    The big difference is if I don't go to watch football, pay for SKY or buy a shirt - I'm not contributing to footballers wages. However banks are in a position where they have a hold over our NEEDS.

    If banks were like footballers then we would be able to choose any rate between 0% and infinity and CHOOSE how much we pay for their services - for both savers and borrowers.
    However the choice you talk about is where you MUST choose between a narrow band of options - but if you don't choose one then it's turnips and potatoes for you my son.

    ...and what lawyers do you know who get bonuses? - I've never met a real one that does. They tend to get paid for the cases they take on - they don't need an additional bonus to do what they're already paid for.

    However if lawyers were bankers they would expect a nice bonus for a result of 'exhonerated' as opposed to a simple 'not guilty'.

    If you're going to defend bankers bonuses then please do so - but don't just make a general point in the direction of another wealthy arena and claim that the similarities justify the original bonus.

    You still cannot explain how bankers make their money - I mean it's been a while and all you can say is 'investment' and 'return' - how about you come up with a good example of the source of profit for banks - I mean it's quite important you explain to the rest of us so we don't all get the wrong idea....

  • Comment number 27.

    Robert,

    Great programme last night - good work.

    Just promise me that you and the other contributors will be making the case strongly when the banks (and probably the Treasury) say nothing needs to change -as they unevitably will when the Independent Commission on Banking publishes its report.

    I can already hear their arguments about loss of UK jobs and no availability of mortgages etc etc

    They will say that Basel 3 is fine and all that is needed is tweaking of their risk models. The problem is they believe their own hype.

    Lets make sure we don't listen to these short sighted arguments as if we don't properly reform the banks in the long term we will be in serious trouble.

  • Comment number 28.

    Good stuff.

    Appropriate levels of remuneration on the back of a difficult year during which GS did really rather well.

    Excellent news for everyone (even the envious little people who seem to inhabit this blog, albeit that they don't seem to know what's best for them).

    Lesson for the youngsters out there: work hard and the world is your oyster.

  • Comment number 29.

    17. At 16:15pm on 19th Jan 2011, DarlingsEyebrow wrote:

    "I'm a shareholder in GS, so I want them to do well so my investment goes up."

    ...and did you make as much noise when the share price collapsed and Goldman had to be bailed out? - I can't see any comments to that effect.

    I hope you wrote a begging letter of thanks to the US taxpayer - because without them you would be a shareholder in nothing.

    Most bank shareholders don't think things through - I mean your dividend is usually a return of SOME of your OWN WEALTH - and you're thankful for that?

    I don't want to confuse you with complicated concepts like "the source of profit" - best you carry on thinking it falls out of the sky.

  • Comment number 30.

    Goldman's continued claim to be the global leader in investment banking is no achievement at all: It's part of the game called - "In and out the Whitehouse & In and out of Wall Street".
    What does this mean?
    For those of us little peons too small to see the operation of the upper echelon this means exactly what it says: "In and out the Whitehouse & In and out of Wall Street."
    Obama’s latest cabinet appointments were shocking - but no one, NO ONE appeared shocked.
    Why?
    Because appointments like these are also part of the game.
    Enter the WhiteHouse Bill Daley (JP Morgan) and Gene Sperling (Goldman Sachs) fighting duo destined to take average American impoverishment to new heights.
    The announcement of Bill Daley, JP Morgan Chase’s Tzar of “government affairs” as Obama’s new Chief of Staff sounded bad, but if you dig around a little, it smelt worse. Other than spending the past seven years serving Jamie Dimon at JP Morgan, Bill Daley was also a Chamber of Commerce chair. While at the Chamber, Daley “played a major role in opposing the REGULATION OF DERIVATIVES.
    Daley was Clinton’s NAFTA Tzar; he was involved in explosion of CEO pay (i.e. record-breaking inequality between poor and rich) and shipping millions of messy jobs overseas. Business Roundable thinks the world of Daley:
    “Business Roundtable has a strong relationship with Mr. Daley and has worked with him in the past on many issues important to both business and the broader economy, such as the successful ratification of NAFTA. Mr. Daley can continue to be an important partner in our fight…. We look forward to continuing our work with Mr. Daley in his new position.”
    Oh and - Daley played a pivotal role in creating the housing crisis, was on the board of Fannie Mae, opposed financial reform, fought for Pharma interests, and adamantly opposed the Consumer Financial Protection Bureau.
    As a board member of the think tank called the “Third Way,” Daley took a strong interest in cutting “entitlements” like Social Security and Medicare. He is a proud member of the Council on Foreign Relations and serves on the Boards of Directors of Merck & Co., one of the world’s largest pharmaceutical companies, and he is on the board of . . . wait for it . . . Boeing. Yes, Daley is a perfect hub for the Pentagon-Wall Street-Pharma nexus.
    Okay, okay, don't get impatient. I'm through venting on Daley. Let's get on with Goldman-Sachs:
    Before Liddy temporarily moved to Goldman Sachs where he oversaw their Audit Committee, Liddy was the person who had the most knowledge of Goldman’s CDO EXPOSURE. He insured it through AIG. Then, Hank Paulson unilaterally made Liddy the CEO of AIG, before teaming up with Tim Geithner to flush $183B tax dollars down the “investment banks too big to fail” bailout.
    And then what?
    Liddy scurried back to the board of Boeing where he met up with his old friend, Bill Daley. Yep, Goldman, JP Morgan, Boeing...Ah nothing like deep, rich, and getting richer friendships.
    There is an ever-turning door between Washington and Wall Street:
    Obama’s pick to replace Larry Summers as his top economic advisor was/is Tim Geithner’s right-hand confidant, former Goldman executive, Gene Sperling. Sperling was also a Clinton-Rubin-Summers confidante who held this same position under Clinton, playing a direct role in implementing the very policies that so horribly wounded the American economy.
    Sperling was a principal negotiator with then-Treasury Secretary Lawrence Summers of the Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act. Gramm-Leach-Bliley repealed large portions of the depression-era Glass-Stegall Act allowing banks, securities firms and insurance companies to merge; thus bringing about what I usually call financial incest.
    Sperling is another Council on Foreign Relations member and has worked for the Brookings Institution.
    Gene Sperling Made Millions On Wall Street As the Economy tanked. By appointing Sperling as director of the NEC (National Economic Council) the president will fuel perceptions that his administration is overly close to Wall Street, installing a policymaker who has not only overseen DEREGULATION of the financial sector, but so what? It's the truth.
    Sperling worked under Rubin in the early Clinton years, when Rubin was NEC director. In Clinton’s second term, during Sperling’s own tenure as NEC director, Congress repealed the Glass-Steagall Act, prompting a rule-easing that allowed Citigroup to become the world’s largest financial services company. Citigroup later got a $45B taxpayer bailout.
    As for Sterling’s most recent achievement, he played a lead role in extending tax cuts to the richest 1%. Could Obama have found any more perfect, cunning, financially deviant pair of Wall Street boys to become his advisors?
    Howard Dean, the man who is supposed to be the “Progressive left” challenger to Obama in 2012, supports Bill Daley as Chief of Staff, calling his appointment a “huge plus.”
    Mother Jones’ David Corn has come out in support of Gene Sperling.
    Knowing all this, don't you feel that the Goldman's pay and bonuses are being well-earned. I mean it's hard to play "In and out the Whitehouse & In and out of Wall Street" - round and round these spinning doors without landing on your butt.

  • Comment number 31.

    25. At 16:41pm on 19th Jan 2011, Robin Joy wrote:

    "They will have to better them if they want to attract any revenue producers from GS."

    You mean revenue 'extractors' of course - unless you're suggesting Goldman employees employed their own labour and didn't piggyback on someone else's.

  • Comment number 32.

    Are they making a profit through their work?
    Yes - Give them a bonus
    No - Don't give them a bonus.

    The years where the system collapsed there should have been no bonuses and maybe cuts to reinforce the fact that they are only as useful as their last balance sheet.

  • Comment number 33.

    If a private company wants to overpay its staff to the detriment of its customers and shareholders that's their business, however bad taste and bad faith it may be. However if that private company wants to enjoy the generous free support of the US and/or UK taxpayers as guarantor of its bad debts then it has a duty to the taxpayers to moderate its business practices, which must include liquidity ratios and not supporting the bonus culture that massively incentivises reckless gambling with no downside of failure.

    Those who would play the game of chasing bonuses should be deprived of the taxpayer's safety net and deprived of the means of gambling with the money of investors. Peston was right in the BBC2 show, banks cannot be allowed to be too big to fail - not only is it a punishment for the taxpayer for the sins of the banks, but if allowed to grow as they would wish, they could become big enough to take down entire countries in their rush to siphon the money they make into their own pockets.

  • Comment number 34.

    What happened to Mervyn King's (and others') proposal to seperate high st. and investment banking. Surely this is the simple solution. The miners did not get bailed out in the 80's because we 'couldn't do without them'. Why should the taxpayer continue to support the Bankers? If they are so clever and capable, why can't they stand on their own?

  • Comment number 35.

    "Shame. Shame. Shame"
    Absolutely - shame I can't get a job there!! I'd only have to work for a couple of years then I could retire.

  • Comment number 36.

    "The top 20% take 80% of the pot" but I bet the other 80% would have to foot the bill if G/S went belly up!

    It would be interesting to know how much the Recpetionists, Cleaners, Doormen, Catering and IT staff etc average salary is - I bet they'd be chuffed to bits with 25% of that £269k a year average!

  • Comment number 37.

    18. At 16:17pm on 19th Jan 2011, writingsonthewall wrote:

    > The bankers should stop moaning and count themselves lucky

    Don't know of any of my colleagues who are moaning to be honest.

    They just get on with their jobs as they have done with the rest of their lives to date: working hard, generally succeeding at whatever goals they set themselves and being well rewarded for their efforts. Although I hate to use a religious trope, the phrase "Protestant Work Ethic" comes to mind.

    Most of the "moaning" in the public sphere seems to come instead from life's losers - the ones who clearly didn't pay attention in school, think that work stops at 6pm and so on.

    The really sad thing is that, whilst stories like this ought to serve as a wake-up call for the little people to better themselves, they often seem to have quite the opposite effect of inspiring only stultifying jealously.

    C'est la vie..

  • Comment number 38.

    Providing they spend all their bonus in the UK on UK goods and services I don't mind what they get. If, however, they try to salt it away in a tax haven, then they should forfeit the last 10 years bonus to the treasury.

  • Comment number 39.

    Can't see what all the fuss is about really. I didn't give Goldman Sachs, or Barclays any of my money to 'work' with. What the real puzzle is why those that did continue to 'invest' when clearly it would be better to work for these firms than invest in them!

    I have given some of my money to other banks ... but don't expect to get back anywhere near as much as the employees will appear to earn from my investment ... but I have no choice. I'm just waiting for the huge complaints when other investors yell foul when their investments go down (and their banks profits and pay go up).

  • Comment number 40.

    I would rather live in a country, where working hard at school, university and at work gave you the chance (albeit remote) to earn telephone number type salaries, than in a country where aspiration is taxed to ensure that you cant!

    If the shareholder's are happy to pay out a huge proportion of their earnings to their employees, then more fool them. We should not encourage a system where the Govt (in the form of the regulator) stifles performance in the name of equality.
    We dont live in a fair world...the faster some people understand that, the better. Trying to make it 'fair' doesnt work. thats called communism, and i think the 20th century has proven that it doesnt work.

  • Comment number 41.

    Presumably there are only a finite number of these top jobs globally for 'top talent' to do? Goldman's reputedly have always payed top dollar to get top talent? I am guessing that all the other banks have similarly skilled groups (unless the banks that didnt come close to failure have less talented folk). If this is the case, where is all the 'top talent' from the bailed out banks going to run to if their bonuses are reduced? It's possible that Goldmans and others might cherry pick a few people who will replace folk in their own staff, who presumably will have to trade down to other banks, probably on reduced packages
    It feels a bit like the football teams, clubs bring in people to play a position and the incumbant frequently has to move on or sit unproductively on the bench - unless you can make a team require >11 players with new positions by changing the game.

    The issue will be to stop the banks doing this, creating new pseudo-markets and regulating them strongly to moderate their market expansion and hence profit lifting tendancies. Hopefully we can change the game from 11 to 5-a-side...

  • Comment number 42.

    Phew, is everything alright after all? DarlingsEyebrow is happy with the investment. Since "we're all in this together" then maybe I should be happy with GS too.

    But something gets in the way ... Oh, I know, it's the feeling that all this financial activity is of no productive value and yet somehow we've created a society where, according to our most readily measurable unit of value, it's the most valuable activity we can be engaged in.

    Justin150 displays wondrous logic in comparing the compensation to revenues ratio of GS with that of footballers and accountants. So, as long as the %age looks OK, we can all be happy, is that it? If sweet shop proprietors paid themselves in the same ratio, would that make GS's stats even more acceptable? What he overlooks is the ridiculously inflated revenues that GS is able to generate from activities of questionable economic worth (in the real sense of the word).

    I might begin to accept the economic value of the investment banks' activities when they accept full responsibility for their losses, instead of palming them off on me and my children. Or when they begin to share their gains with me and other taxpayers to compensate for the risk we're forced to bear. But that would be the end of the circus wouldn't it?

    If banks are too big to fail, they shouldn't be, so cut them down to size and let them fail when they get it wrong. Just like every other business.

    So yes, to quote DarlingsEyebrow, "go Goldman". Just go.

  • Comment number 43.

    Why attack only the bankers - the editor of the Daily Mail receives £2,900,000 per annum for undermining the morale of the nation by constantly attacking the sounder structures of our society for example local government whilst promoting the cult of celebrity which contributes very little to our well being - he should be ashamed

  • Comment number 44.

    This really is disgusting. The contempt these crooks show for the rest of us is matched by the politicians who trot out indignant rhetoric and take no action to stop this. Even the benign British public won't put up with this. It will end in tears.

  • Comment number 45.

    3. At 15:26pm on 19th Jan 2011, Simon in Cornwall wrote:


    Any industry that has workers dependent on housing benefits or any other benefit to keep the employees away from a life in squalid conditions is in effect, in receipt of state aid.

  • Comment number 46.

    C'est la vie indeed, kalokagathia, the internet is littered with WUMs like you.

    "Little people"? "Protestant Work Ethic" (sic, weird capitals)?

    Poor effort.

  • Comment number 47.

    Enjoyed your show last night Mr Peston. Though it was rather labourious in its recital of the situation, it served well to rebutt Bob Diamond's comments a few days earlier.

    They say history doesn't repeat itself, but it does sometimes rhyme. The factors contributing to the "credit crunch" aren't entirely unique in human history. What interests and concerns me about this latest episode is just how powerful the massive global banks have really become. The have demonstrated that they have now truly conquered and command, not just the business world, but nations of supposedly free people. Our public finances are not under the control of the governments we elect, but them. Their losses are for our sharing, their profits are for them. They are "too big" for us to object.

    Whilst individually, they can acknowledge the failings in their industry (by any reasonable standard), they are collectively unable to show remorse, so bad has the culture become. I put the threat they cause my nation higher than any terrorism we feel it necessary to needlessly waste lives for.

    I vote Conservative because I believe in free markets and I like my state small. I like my state small, but powerful. Why is my government not protecting my nation from this threat? I wanted a strong and clear leader, instead I got a couple of Etonian nitwits.

  • Comment number 48.

    I look at a story like this and have to admit that I feel less angry than jealous. Yes they are earning a lot. Wish I was... I wonder how much of the reaction to bonuses comes from something a bit more base than high-minded indignation?

  • Comment number 49.

    16. At 16:14pm on 19th Jan 2011, Justin150 wrote:

    Are you seriously comparing failed bankers (or any other kind of banker) with people who chase a ball about?

    Do they have a stadium so we can all go watch them do their marvellous stuff? And how much is the season ticket?

    I mean, when my hubby is man-depressed when England get their backsides kicked off the pitch isn't a problem. He just thinks it is. Until he gets to bed.

    I, on the other hand, along with the majority of the people on this planet, simply don't care. But when bankers systematically destroy the global economy, the livliehood of even just one single person, then that is a very different matter.

  • Comment number 50.

    37. At 17:19pm on 19th Jan 2011, kalokagathia wrote:
    The really sad thing is that, whilst stories like this ought to serve as a wake-up call for the little people to better themselves, they often seem to have quite the opposite effect of inspiring only stultifying jealously.

    C'est la vie..

    ----------------

    And what exactly do you mean by little people - Dwarves? Pygmies? Children? Or have you been watching too much Gulliver's Travels? Or do you mean, as I suspect, people who don't work for investment banks, people who you consider to be less intelligent, less hard-working and therefore less deserving than yourself. You sound like some kind of Victorian mill-owner. And yet people still wonder why bankers are hated so much.

    Perhaps those "little people" decided there was something more useful they could do with their lives. Maybe they have talents more suited to productive activity rather than shuffling bits of paper around. I won't bother naming them, I'm sure someone as intelligent as you can work out which professions I mean, just as I'm sure you can work out what sort of world it would be if everyone was a banker. Luckily for you, there will be "little people" around to wipe your backside for you when your old and senile - just don't let them know what you used to call them on the internet back in 2011.

  • Comment number 51.

    16. At 16:14pm on 19th Jan 2011, Justin150 wrote:

    PS

    Do you realise that by destroying jobs, the likes of JP Morgan make money. From the food stamps that are given to the poor? I mean, Rooney et al, should buy up the Kleenex company for a win-win, shouldn't they....

  • Comment number 52.

    I must be missing something. The profits that are being distributed come from someone's loss. YOU!!!

    WE need to understand, now, how this is still happening when governments supposedly have a lot of influence over banks. Theft is a crime but banks seem to have a 'get out of jail free card' which they haven't needed to use yet?

  • Comment number 53.

    Goldmans represents itself and very rich clients.
    The clients don't appear to have a problem with GS trading on its own capital so I presume they are making bucket loads too.
    OK fair enough but then I ask myself where are the profits coming from.
    Then I see that GS is a UK GEMM and have to assume that a large proportion of that profit is based on underwriting and trading in UK Gilts and I want this stopped. Anybody else ?

  • Comment number 54.

    Shooooooould, Goldmans go ahead and get paid so much?
    After all, to most commentators it sounds like an unfair reward for their efforts.

    (LONG PESTON PAUSE HERE)

    If,.... Goldmans Tier 1 capital ratio is sound then why not let them enjoy the spoils?
    They have survived the,... rout, ... and.... as the one of the best funded banks left standing they are in a position of power that,... should be rewarded.

    Goldmans argue, and quite persuasively, (when they called me up from the Premier Inn, Harlow, for a chat after their annual line dancing competition) that they are actually a philanthropic organisation.

    Sooooooooo, the question is...... Why,... does everyone focus on bonuses and ignore the charity work they do?

    Without theeeeeeem, small family businesses like Ferrari and Sunseeker would,... disappear and the daily business / gossip / comment / opinion pages would have nothing to report. The resulting collapse in confidence could lead to a domino effect throughout the media and reporters would be forced to dig deeply into the accounts for information.

    No one wants that. Soooooooo, good for you Goldmans.
    You have my number.

  • Comment number 55.

    24. At 16:40pm on 19th Jan 2011, writingsonthewall wrote:
    "They haven't sacked a single person"

    I hate to defend them but one thing they have done is sack people and at all levels, just not the very top few. This is one of the ways bankers try to justify their pay - it is a hugely insecure career.

    See e.g. http://news.bbc.co.uk/1/hi/business/7687417.stm and that was just one round of cuts, there were plenty more (try googgling Goldman Sachs and fires or cuts staff and you will realise your error pretty clearly).

  • Comment number 56.

    o.k. we all know that the top honchos get massively more than the vast majority of employees, but still everyone who works for a bank these days gets suspected of earning vast and undeserved salaries and bonuses. Can anyone provide at least a reasonable guestimate of how much the different grades among the 35,700 employees of a bank such as Goldman earn and receive in bonuses? The real obscenity is presumably not the proportion of revenue parcelled out as compensation, but the fact that of that sum such a huge slice goes to so few, while the majority and the lowly get very little? And not just at banks! Can you provide any detail, Robert? Time to revisit Marx's theory of surplus value, one might think!

  • Comment number 57.

    Of course the sums are shameful. However, on the 6pm news, Peston asserted that on average, Goldman Sachs employes 'took home' £269,000 in 2010. Is this right or is it just lazy journalism? Surely the taxman would be taking the odd few quid out of it? And do the British employees not make NI contributions?

  • Comment number 58.

    Compensation!

    I love the way the financial services sector get `compensation' rather than wages.

    Gentlemen used to get compensated for the cost of their time in assisting in the service of the aristocracy. It has a nice, posh genteel ring to it. Money is provided to compensate you for the time you have invested in such and such activity as otherwise you would have been attending to the welfare of your estates.

    What a load of nonsense!

    I suppose receiving `compensation' defines you as a gentleman, rather like the sign on trains which once said `Gentlemen, lift the seat'.

    Silly me thought it was behaviour and breeding that defined a gentleman, but then I am only a scholar.

    Compensation............what a laugh!

    But benefits: we all know about those. But aren't they for scroungers living off the taxpayer's purse. Now a banker would never do that now, would he?

  • Comment number 59.

    33. At 17:07pm on 19th Jan 2011, Dodo56 wrote:

    “…they could become big enough to take down entire countries in their rush to siphon the money they make into their own pockets.”

    And they haven’t already? Where have you been?

  • Comment number 60.

    Whatever your view, please can contributors (particularly those with a propensity to avoid any rigorous analysis....yes, writingsonthewall I'm looking in your direction) avoid factual errors:

    1) GS weren't saved by Warren Buffett or the US Treasury...WB did what I did - he took a calculated risk that GS was undervalued following the events at Lehmans and bought shares. A lot more than me, it has to be said, but the same principle. We've both enjoyed the rewards for our risk. But, we didn't "save" GS.

    The Treasury ordered GS to take $10bn because they were worried about contagion risk for weaker banks and that if they only supported those weaker banks it would send a clear signal to the market who was in trouble. So, they made the top 10 banks by market cap all take Fed TARP funding. GS didn't need it. It paid it back (with interest) as soon as they were allowed to. The US taxpayer made money on the deal.

    2) Bankers aren't "crooks" and it's sloppy / libellous to refer to them as such. A small number of their employees (probably a few hundered across all banks globally) got some decisions very badly wrong and neither they (nor the regulators nor the politicians nor even the extraordinarily talented brilliance of Mr Peston) understood the systemic implications. No-one did this on purpose.

    3) "No-one lost their job"??!! Several CEOs did - at JPM for example, and Morgan Stanley - plus tens of thousands of ordinary, normal, not-to-blame bank workers who paid the price for the losses.

    4) And even if you have another view on the above...please remember it's not all bankers who are these evil monsters some of you want to attack. Most bank staff are just working hard, trying to get on and don't get the $$.

    Meanwhile, here's to my GS shares continuing to rise.


    Thanks.

  • Comment number 61.

    37. At 17:19pm on 19th Jan 2011, kalokagathia wrote:

    A loser is someone who is too afraid to stand up and ensure all of us live in a decent, fair, healthy world. Because they are too scared to rock the boat.

    S far all those protesting Tunisians won round 1, at least and certainly do not look like losers from where I am sitting.

  • Comment number 62.

    24. At 16:40pm on 19th Jan 2011, writingsonthewall wrote:

    "I don't want to sound pedantic but.....the people at Goldmans who are getting the bonuses are the same people who brought the company to the brink of collapse."

    This is a definte fact? Seem to remember that GS made quite a few staff redundant as reported here http://www.independent.co.uk/news/business/news/from-goldman-sachs-to-jcb-impact-of-.htmlssion-spreads-971479.html

    so perhaps your statement needs checking. Don't get me wrong, am not saying it is not true, just very difficult to prove

  • Comment number 63.

    Re Mike G:

    "o.k. we all know that the top honchos get massively more than the vast majority of employees, but still everyone who works for a bank these days gets suspected of earning vast and undeserved salaries and bonuses. Can anyone provide at least a reasonable guestimate of how much the different grades among the 35,700 employees of a bank such as Goldman earn and receive in bonuses? The real obscenity is presumably not the proportion of revenue parcelled out as compensation, but the fact that of that sum such a huge slice goes to so few, while the majority and the lowly get very little? And not just at banks! Can you provide any detail, Robert? Time to revisit Marx's theory of surplus value, one might think"


    The general way to think about it is that those jobs which exist in other industries...receptionist, secretary, operations roles, IT, HR etc etc....will get paid similarly to any other similar job plus maybe 10-25%. In return, they are expected to work in a non-union workplace where the EU working time directive is "voluntarily" opted out of and you're always on-call...evenings, weekends, holidays (maybe not for the receptionists but for most of them).

    For the more specialist Bank roles....they'll pay for intellectual capital & revenue generated...so a direct relationship to how much they earn for the firm. You don't earn, then you get paid zero and fired. Do well, and you take a share. From what I know, you'll see a lot of folks in the £40-80k band with a rapidly tapering pyramid above that up to the few £1m plus earners.

  • Comment number 64.

    WOTW is right that on balance GS haven't got rid of anyone - see Robert's penultimate para.

    Oh dear, the poor guys & gals have lost 14% of their bonuses against a stated loss of 38% of profits. If they weren't a bank there'd be NO bonuses.

    Why complain when the bulk of the profits goes to the bankers and not the owners (ie shareholders). There's nothing wrong in that, the staff produce profits and the risk is taken by the population at large. Increased profits are paid out in bonuses so the share price stays reasonably flat. On the other hand the transfer of risk to governments makes these gilt edged investments.

    It's the bankers' system - or something close to "bankers."
    (Note to the moderator - I am thinking of "bonkers".)

  • Comment number 65.

    In light of this news was it fair to call Goldman Sachs -

    "A huge vampire squid wrapped around the face of humanity sticking its blood funnel into anything that smells of money?"

    By the way does anyone know the figure for the money Goldman recovered from AIG after the US Government bailed out AIG - on the recommendation of Mr Paulsson - an ex Goldmans man.








  • Comment number 66.

    When asked to comment Goldman Sachs said, (to the rest of the world,) "just get lost!"

    Politicians still saying...."oh, all right then."

  • Comment number 67.

    I may be alone here, but I've given up caring any more how this bunch of crooks keep justifying such rewards.

    3 years have passed to sort this out and there has been a change in Government during that time.

    Nothing has changed and nothing will until these types realise the damage they've caused. They are taking increasing amounts from the system whilst the rest of us just suffer.

    "25% mandatory wage cuts boss ?"

    "Yeah... times are hard... it's either that or redundancy"

    "Hmmm.... I'll take the pay cut"

    But never mind, some bloke is making an average of over $200K in payments.

    I've read this blog for a while and despite my scepticism towards the revolutionary fervour, even I'm starting to realise that some of these types are going to get what's coming to them.

  • Comment number 68.

    It ammuses me that you seem to defend them by sayind that they made a good amount of money all things considered and then say "and when it was pilloried by many senior members of Congress for perceived shortcomings in the way it conducts business."

    Which seems to imply that because them made a lot of money they are being run well.

    Did the "credit crunch" teach you nothing?

  • Comment number 69.

    OK,

    Enoguh of this jealousy. It's embarassing. Let's look at a few factors that need to be considered when looking at these numbers:

    Most of the people employed by the banks have made a serious investment in their education. Whilst in some cases this is a financial investment (in the case of those who have masters, PhDs, MBAs or have hd to pay to attend the best colleges in the world - the banks are filled with staff from the best institutions from all over the world), more importantly though they have invested their time... working extra hours of a night throughout school and university rather than hitting the park to drink cider or terrorise local communities. They've studied and have seen relationships break down due to the dedication they have shown through their work ethic that have allowed them to earn these large salaries.

    Next lets consider that for most an average day will be 7am - 8pm (although can often be significantly longer on occasions). Assuming they get 7 hours sleep and it takes 30 mintes to get to work that means they have 3 hour a day of free time... compare this to someone who work 9-5, who has 8 hours free, and perhapsmore importantly has predictability.

    Then lets look at these specific numbers here today. Revenues were down 13%. Due to the head count so was pay and bonuses. But lets consider someone with a salary of £100k (certainly not a shody figure) then their bonus has fallen by 20% this year. Then lets consider that they're now paying 50% tax vs 40% tax last year. In terms of what they actually receive, their bonus has fallen over 30% this year.

    SO effectively the firm hasn'thas quite as good a year... and nor have they. Everyone at the firm is incentivised to help the firm earn as much money as possible and they all shar in tis (fair enough to difffering degrees). People who work at investment bnks ar high achievers and strive to do better. yes they want to be paid as much as possible (who doesn't), but hey also wat to do a good job, get promoted and reach the next salary band... it's not like they're just trying to make a quick buck!

    As for all the other garbage people have been spouting about them not sacking people (I think it was about 25%), or about bailouts from the uk governments etc... I'm not even going to waste my time.

    These people make sacrifices and have made sacrifices oveer the last 30 years that are grater than those most other people make. They are being "compensated" for those sacrifices now. That's fair enough in my book since it's not like they ever lost money in any given year.

  • Comment number 70.

    "Did the "credit crunch" teach you nothing?"

    Is that those years 2007-2010 were they made a profit every year. Oh they're so stupid aren't they!!

    Having a go at RBS, I can understand that.. but GS and JPM deserve credit where it's due!

  • Comment number 71.

    60. At 18:36pm on 19th Jan 2011, DarlingsEyebrow wrote:

    “1) GS weren't saved by Warren Buffett or the US Treasury...WB did what I did - he took a calculated risk that GS was undervalued following the events at Lehmans and bought shares. A lot more than me, it has to be said, but the same principle. We've both enjoyed the rewards for our risk. But, we didn't "save" GS.”

    No arguments but would you have wanted some of Joe Publics money if your risk had failed?

    “2) Bankers aren't "crooks" and it's sloppy / libellous to refer to them as such. A small number of their employees (probably a few hundered across all banks globally) got some decisions very badly wrong and neither they (nor the regulators nor the politicians nor even the extraordinarily talented brilliance of Mr Peston) understood the systemic implications. No-one did this on purpose.”

    I beg to differ, they knew exactly what they were doing – after all they are the experts (ex=as been and a spert is a drip under pressure), or wasn’t there any opposition and prediction of the outcomes?

    “3) "No-one lost their job"??!! Several CEOs did - at JPM for example, and Morgan Stanley - plus tens of thousands of ordinary, normal, not-to-blame bank workers who paid the price for the losses.”

    Rather conceited knowing the current state of the economy (UK and US) and 2.5mil now unemployed in the UK, but as we all know morality and responsibility are partners so they have no room in banking

    “4) And even if you have another view on the above...please remember it's not all bankers who are these evil monsters some of you want to attack. Most bank staff are just working hard, trying to get on and don't get the $$.”

    But come on blogs/boards and preach their pay masters propaganda

    “Meanwhile, here's to my GS shares continuing to rise.”

    Very selfish indeed – but believe it or not I wish you luck, not doing so would only bring me to your perceived level and I am not about to lower my standards.

    As for Whatthe I personally do not like his ideals but you cannot deny his points are usually valid but at times needs more backup and the same can now be said of you. But I get the feeling that Whatthe doesn't need my help

    Regards
    Common_man

  • Comment number 72.

    64. At 19:10pm on 19th Jan 2011, pietr8 wrote:
    WOTW is right that on balance GS haven't got rid of anyone - see Robert's penultimate para.


    I hate to spoil the argument, but it is possible to fire those employed at the start of a calendar year, and still increase headcount by hiring more than you fired.

    In any case, links further up the page highlight that GS was not immune to a "headcount reduction" off the back of the financial crisis developing.

    #63 - an interesting insight into the scale of the issue. And it possibly highlights the fact that the hated entity of "The Banks" is far too sweeping a generalisation - it's fairly obvious that those who failed in their duties prior to the crash, and thus caused it, were those at the top of the pay pinnacle and who were making the big calls, and not the IT tech guy who's pulling in 25% more just because he works in a bank. So shouldn't the focus of the anger should be on those at the top of the tree, and not just anyone with the wrong logo on their swipe-card?

    The interesting stat for me, and unless someone fancies being devious with the HMRC database (totally illegal - not condoning it, for obvious reasons!), we'll never know it, but it's how many of those who were raking in, let's say, the top 5% of the wages in this sector pre-crash, are still employed in the sector now?

    To my mind, the short term problem remains, for the vast majority, with investment banking and not the associated retail arms (in those companies where they co-exist). There are obvious exceptions to that rule (Lloyds' misguided takeover being the first that pops to mind), and I'm not suggesting that retail banks are totally blameless now that we find ourselves as a society with a massive debt burden.

    Were but this mess was simple to navigate out of, but it's because it's not that we're left with this inertia, whereby the original perceived offenders (as companies, not necessarily all of the individuals themselves) are able to operate on a BAU basis until forced otherwise.

    Of course, it's very easy to post blogs stating that we should sack them all, change the system totally, etc etc, and perhaps in a utopian world, that would indeed have the desired effect, but in the current legal and political system, it simply won't be happening.

    I've no doubt we'll soon see protestors in Canada, rather than Trafalgar, Square but I strongly doubt it will have the overall "desired" effect - while events in Tunisia might suggest that mass uprising will change the world, the focus in Tunis was on a clear "target", and against a considerably harsher "regime" than that which exists in this country.

  • Comment number 73.

    I always have this fantasy about what would happen if a bank really DID fail. I mean, take Northern Rock for example. If it had gone bust, what would have happened to all the people with mortgages? I have this fantasy that they would all be able to say 'woo hoo!' and not have to pay a penny more. After all, the big bad bank is bust. Shame about the savers of course....

  • Comment number 74.

    And one last comment....these bonuses which seem to make the jealous & the lazy so much will generally be paid in shares which don't vest for 2-5 years.

    So, from a headline of £269k per head (which as has been mentioned very few actually get, skewed as it is towards the lucky few at the top, but let's take it as an example..) you can knock off salary received already - say £80k, leaving £189k.

    Less pension contributions...£8k
    Less other benefits (medical etc)...£2k

    Leaving £179k. Of which, 51% in tax to the taxpayer leaving £87k
    Of which, 75% paid in shares over 3-5 years
    Leaving actual cash recieved of £22k.

    Not bad, of course, and the share will be recieved subject to a claw back for subsequent losses and changes in share price, but hardly a Premiership-footballer type income in return for 14 hour days & lots of pressure & stress. And hardly worth the vitriol.

  • Comment number 75.

    73. At 20:24pm on 19th Jan 2011, sporpo wrote:
    "I always have this fantasy about what would happen if a bank really DID fail. I mean, take Northern Rock for example. If it had gone bust, what would have happened to all the people with mortgages? I have this fantasy that they would all be able to say 'woo hoo!' and not have to pay a penny more. After all, the big bad bank is bust. Shame about the savers of course.... "

    Afraid not - I believe that whomever came on as the administrators for the bankrupt firm would immediately look to sell off the assets (ie the loans, mortgages, credit card accounts etc etc) to another lender. The really bad news would be if the new lender had the opportunity to reprice those loans (I'm unsure on the law on this) to a higher rate than that which they were originally on. One thing's for sure - you definitely won't get off without paying the debt back!

    As you rightly say, it would be bad news for savers....

  • Comment number 76.

    73. At 20:24pm on 19th Jan 2011, sporpo wrote:

    “…If it had gone bust, what would have happened to all the people with mortgages? I have this fantasy that they would all be able to say 'woo hoo!' and not have to pay a penny more. After all, the big bad bank is bust. Shame about the savers of course....”

    2 Problems with your fantasy

    Firstly your fantasy may not be too far out! To enable a transfer (i.e. to be assigned to another owner) you need the owner to sell it! But! Who! is the owner if it as been securitised? The US are fighting over this as we speak.

    Secondly if one did fail who will pay the people who bought the securities, these people/institutes/governments are unknown and probably bought offshore, just follow the squeals when one does go bump (properly not NR style)

    Lets make it happen!

  • Comment number 77.

    58. At 18:35pm on 19th Jan 2011, stanilic wrote:

    Well said.
    Last person that ever called my husband a gentleman retreated at the glare. It was a good choice.

    Gentlemen have more than a modicum of decency about them. This shower of banker-spivs have nothing more than other people's hard-earned cash.

  • Comment number 78.

    Banker bashing is so easy to do. But are all banks and bankers the same? For a start not everyone who works in a banks is sat there at the roulette table (sorry trading desk) punting the money of hard working savers. Most of the people who work in banks support the "front office" staff. In fact in Europe a top tier investment bank probably only has about 800 traders, salespeople, and coverage bankers. Some of these, such as those working in the interest rate trading areas have been generating good revenue for their bank throughout the crisis (should they be penalized?)

    And not all bank are same. The fact is the financial crisis was caused by the small number of banks who had piled into the US RMBS market. Of these it was Lehman Brothers and Bear Stearns who were most at fault. Lehman made about $1.6bn in revenue in 2006 from RMBS and Bear about $1.2bn. This was a major source of revenue for them. But both institutions lacked the risk management skills to see the potential disaster and lacked the capital to cover losses when it came. Other banks are just as much a victim of the crisis as anyone else.

    If anything Goldman Sachs should be held up as an example. They have excellent risk management (anyone interested should read David Viniar's testimony to the Senate Permanent Subcommittee on Investigations). I work in a small company that researches the investment banking market. I see that there are some parts of banking that can be improved, but at the end of the day we need banks and we need good banks. To lump all bankers into one basket is like saying "all journalists hack people's phones", some may have done but most don't. Much as it may dismay people, I have to say Goldman is one of the good, responsible banks.

    A final thought; just remember that 50% of that bonus money goes straight into the HMT coffers as tax. If the bank keeps it you can expect only 28% from corporation tax. I think public services could do with the £3.5bn or so that it will get from bank bonuses.

  • Comment number 79.

    Greed, sleaze and arrogance ... but were the payments made to bank employees working in the UK?
    What work supposedly generated these bonuses ... was it good or bad for the British taxpayer?
    How many (if any) British jobs were created in the UK as a result of the trading that is purported to have generated the bonuses?
    Many of us 'know' that these payments will not stand up to any kind of reasonable scrutiny and offend every principle of 'strategic proportionality' regarded the much needed democratically accountable, strategic management of the UK economy and as properly having regard to 'rights and privileges'.

  • Comment number 80.

    "The story at Goldman Sachs is that net earnings have fallen by a considerable amount, 38%, to $8.4bn (£5.3bn), and net revenues have dropped by 13% to $39.2bn (24.5bn)"

    Does that mean the media will try to destroy the company, as they are doing with HMV? And if not, why not? Is it because GS is still profitable? Don't suppose anybody thought to check whether HMV will still make a profit this year (screaming media aside, they're still on course for £40m).

    Double standards, natch.

  • Comment number 81.

    #75. At 20:41pm on 19th Jan 2011, north_view wrote:
    73. At 20:24pm on 19th Jan 2011, sporpo wrote:
    "I always have this fantasy about what would happen if a bank really DID fail. I mean, take Northern Rock for example. If it had gone bust, what would have happened to all the people with mortgages? I have this fantasy that they would all be able to say 'woo hoo!' and not have to pay a penny more. After all, the big bad bank is bust. Shame about the savers of course.... "

    Afraid not - I believe that whomever came on as the administrators for the bankrupt firm would immediately look to sell off the assets (ie the loans, mortgages, credit card accounts etc etc) to another lender. The really bad news would be if the new lender had the opportunity to reprice those loans (I'm unsure on the law on this) to a higher rate than that which they were originally on. One thing's for sure - you definitely won't get off without paying the debt back!

    As you rightly say, it would be bad news for savers....

    -------------------------------------------------------------------------------

    If the book debt couoldn't be acquired by someone who cold proce adequate reserve which would be unlikely for a major lender like Northern Rock or HBOS there would be two choices. Government bailout or call in the loans i.e. repossess all mortgaged property where borrowers couldn't repay or refinance their debt so the banks could realise their assets, highly impractical as the legal system couldn't cope. That's why they were bailed out, the alternatives would be unthinkable.

    There would be one other possible event - mass public default or revolt, very probable if you're kicking three million people out of their homes and the kknock on effect of this would be total banking collapse.

  • Comment number 82.

    HonestScouser....

    I have a significant amount of 'investment' in my education an Msc, and a PhD.

    "Next lets consider that for most an average day will be 7am - 8pm (although can often be significantly longer on occasions). Assuming they get 7 hours sleep and it takes 30 mintes to get to work that means they have 3 hour a day of free time... compare this to someone who work 9-5, who has 8 hours free, and perhapsmore importantly has predictability."

    I work those hours. so do many other people.

    How come I'm taking a 25% cut in wages from a company that was prospering through it's innovation and technology and actually creating real exportable engineering ?

    Yet the lot your defending, who didn't actually create anything, didn't actually manufacture any value or real wealth and then brought this whole house of cards crashing is still justified in taking these massive salaries ?

    Your excuses are wearing very thin with many people.

    These people should be sacked, not rewarded.

  • Comment number 83.

    20. At 16:20pm on 19th Jan 2011, writingsonthewall wrote:

    >This is true John - I in fact became a millionaire last night when I 'revalued' my >broken biscuit collection at an astounding £4 million. However this morning >SOMEONE broke into the tin and scoffed the lot - and now I am destitute and poor.

    Haha but remember you still have the tin and a banker would hedge those biscuit losses against tin prices. I have just checked the London Metal Exchange and tin has increased 50% in the last year, no doubt due to spivs like Goldman Sachs gambling that in economic collapse people stock up on tinned food.

    Meanwhile us poor souls have to swim in the biscuit markets. I had my life savings invested on Rich Tea and lost the lot when Peter Kay pointed out how useless they are for dunking in your tea and they should be called One Dips.

    http://www.youtube.com/watch?v=MJr9ekTf0xc

    I guess I don't have that killer instinct to work in an investment bank....like I care, I'm off to dunk my hob nobs.

  • Comment number 84.

    "Can anyone provide at least a reasonable guestimate of how much the different grades among the 35,700 employees of a bank such as Goldman earn and receive in bonuses?"

    it is impossible to say. I worked there for 4 years and my bonus was never more than 40% of my annual salary. No one at my levels (analyst and associate) ever got any more than that. Once you get to VP and MD, and depending on which division you're in, the % can be loads more. Oh and my annual salary started at 36000 k and rose 10k in 4 years so now, I didn't earn a stupid salary.

    I worked my fingers to the bone and deserved every single penny they paid me. Regular 60 hour weeks and weekends.

    And I lost my job in the first round of cuts in 2008.

    I hate these stupid sensationalist stories around how every member of staff gets 100s or 1000s of pounds a year. And Robert, no matter how much you may explain in your story that it is an average, most average Joe's will read the headline and tut tut to themselves and never get to the story. Every year without fail this stupid headline comes out. If it was any other public enterprise, no one would bat an eyelid.

    37000 of the 37500 did not have anything to do with this mess we find ourselves in, they, like me, we just trying to make a living as best they can. Just get over the banking bashing now would you?

  • Comment number 85.

    69. At 19:54pm on 19th Jan 2011, HonestScouser wrote:

    >These people make sacrifices and have made sacrifices oveer the last 30 years >that are grater than those most other people make. They are being "compensated" >for those sacrifices now. That's fair enough in my book since it's not like they ever >lost money in any given year.


    The only thing they have sacrificed is trillions of tax payers money and decades of growth on the alter of greed.

    They are being 'compensated' for this sacrifice by keeping their jobs, pocketing huge bonuses while everyone else picks up the tab.

    Your last ridiculous statement about never losing money in any given year does not even warrant a reply.

  • Comment number 86.

    Looks like we as a society are still endeavouring to encourage the expansion of the blood befunnelled vampire squid population. Personally, I'd rather go with Ripley: "I say we take off and nuke the entire site from orbit. It's the only way to be sure."

  • Comment number 87.

    Usual suspect:

    Financial Services generates c.£75bn a year in tax for the UK according to the Treasury (that's corporation tax plus income tax & NICs from employees but excluding VAT on purchases made from net pay).

    Not creating real wealth eh?

    How much more income tax are you willing to pay to cover the shortfall when you sack everyone? By the Treasury's model, it'd be about 8p in the £ higher at the basic rate.

    I'm not a banker nor a natural apologist for them, but I do think that the vitriolic criticism is excessive and is in danger of becoming destructive.

    We cannot change the past (although I wish we could too) but let's not destroy the future too by losing the jobs and the revenue the Banking industry can generate and which we need to get the UK economy back on track.


    D'sEB

  • Comment number 88.

    Same people running the same banks under the same rules and having no moral compass, in the event that it all goes pear shaped and said banks are to big to save who will pay the price, not those who are running the same banks under the same rules, they are all billions of pounds richer and can sit in their ivory towers completly insulated from the fallout of their own greed, or can they ?.

  • Comment number 89.

    Hi new to the site but just had to respond to one comment re bonus structures where it was suggested that maybe a uniform bonus could be paid as everyone contributed to the company. I cannot remember the exact split in Barclays last set of figures but I believe that the investment banking side made approximately 80 percent of the profits.Let me also add that I do think that the senior guys bonuses are far too high but the vast majority of the guys are on profit related bonuses. Also it hasn't been mentioned that if they don't make money they are, on most occasions sacked.

  • Comment number 90.

    The story at Goldman Sachs is that net earnings have fallen by a considerable amount, 38%, to $8.4bn (£5.3bn), and net revenues have dropped by 13% to $39.2bn (24.5bn)

    mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm

    Proving that Goldmans axe is well positioned to get a subprime cut from Bernankes big chopper [ the one that reguliarly flies over the wall street cookooze nest ] looking for the first shoots of spring.

    Of

  • Comment number 91.

    This is all irrelevant, 5 million people in the UK hold the capability of bring the whole banking and national financial system to its knees.

    If 5 million average people in the UK declared bankruptcy tomorrow, all the banks will be bankrupt (such is the wonder of FRB)

  • Comment number 92.

    84 you say your salary after 4 years was £46000 and you only ever got 40% of your salary which equates to £18400 as a bonus, which totaly contradicts your statement that you are fed up with people complaining about people who earn 100s or 1000s of pounds in bonuses and that we should all move on. I am not suprised from your comment that you were made redundent in 2008, your basic maths is poor, and your grasp on the reality, for most people, is beyond belief. Your potential bonus was more than most people earn in a year.

    You say that you deserved what you earned for a 60 hour week and weekends as well, most, if not all, self employed people work as many if not more hours, and do every weekend for pay far lower than what you recieved. The only diference between them and you was that most of them produced or provided something of worth to the world for a lot less than you.

  • Comment number 93.

    84. At 21:38pm on 19th Jan 2011, amandak wrote:

    Oh and my annual salary started at 36000 k and rose 10k in 4 years so now, I didn't earn a stupid salary.

    I worked my fingers to the bone and deserved every single penny they paid me. Regular 60 hour weeks and weekends.

    And I lost my job in the first round of cuts in 2008.

    37000 of the 37500 did not have anything to do with this mess we find ourselves in, they, like me, we just trying to make a living as best they can. Just get over the banking bashing now would you?

    ------------

    So despite telling us how badly you were treated you still feel the need to defend them!! Whilst the guys at the top took home multi-million bonuses the workers on the floor, such as yourself, took home a nice but unspectacular wage in return for a 60 hour week and a boot up the backside when it all went pear-shaped. Did you ever stop to think that without your efforts then maybe your employers wouldn't have been quite so able to pay out the massive bonuses TO OTHER PEOPLE!! You are just as much a victim as the rest of us, just another overworked cog in the machine that generates massive payouts for a select few. You should be queuing up to bash them yourself. You know what they say... there's none so blind as those that refuse to see - open your eyes!!!

  • Comment number 94.

    As the majority owner of RBS and part owner of Lloyds we want all banks to make big profits. Its that simple. Then we, the taxpayer, will receive a healthy return from our investment. We need the banks to do well so that we can go back to the lives we loved two years ago. No one was complaining then, during the boom years of the 90s and 00s.

    Yes the banks took risks they shouldn't have and I agree these need to be sorted out but bonuses must be paid. Bank chiefs wouldn't pay bonuses to staff if they didn't believe it would improve their performance. And we want them to perform well as we can't afford them to collapse or the world as we know it will be in ruin.

    Furthermore, if President Bush hadn't told the banks that they could sell mortgages to anyone this mess probably wouldn't have happened. He told banks to give homes to people who had no income whatsoever. An idiotic idea! Every American can be a home owner. Unfortunately that can never happen.

    The overall system is called capitalism. Most people on this clearly wish to adopt a system that failed with the Soviet Union.

  • Comment number 95.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 96.

    The fixation on banker bonuses has gone on too long in my opinion (that may be an unpopular opinion).

    A few years ago I worked in recruitment placing senior managerial positions in the NHS and local government. There are plenty of people in the public sector on £200K+ salaries. They generally (obviously there are exceptions) work 9-5 and have almost complete job security.

    Bankers may get big salaries but they generally work 14+ hour days and can loose their jobs at a moments notice.............I know which ones I think deserve their pay checks more.

    Also for those who will straight away jump to conclusions; I'm not a bankers

  • Comment number 97.

    The Usual suspect...

    Whilst it sounds like you did make the investment in your education (which is very commendable) you've then made the active decision to pursue your choice of career. I'm sure there were many different options in terms of roles available to you on qualification.. potentially investment banking. You've made your choice not to go into law or banking and decided to pursue something that you find mentally stimulating, were you feel that you are making a difference, but potentilly was a career that is rewarded financially to a lower extent. All these facts are usually well flagged whhen your considering what you want to do. The fact that you've decided banking isn't for you (assuming you had the acadmeic and appropriate skill set) when it was an option open to you means you can't moan that these people earn xyz and now you don't.

    You say banks don't do anything, but I'm pretty certain that if you look at the history of your company the finance industry and investment banks will of been instrumental in helping them grow, matching people with ideas for companies to those who have capital to invest. You'll probably find that before you go anywhere there'll be seed capital, a few rounds of fund raising as the company grew and required new facilities, a larger wage bill and greater working capital requirements, the company may of needed to hedge input costs or foreign exchange, maybe required project finance or needed help to buy a competitor or to go public in order to allow growth (and subsequently allowing them need to take on more staff.... like you, or your friends in the office). The phrase money makes the world go round is actually quiet apt.

    The reason why your having to take a pay cut is probably because customers no longer feel that they need to buy the innovaton or technology your company offers - either because its a luxury purchase, or its targeted at a demographic that is not growing, or someone else is offering something better. I'm sure when you decided to join your current company you took into account that it was a cyclical business and a number of technology based companies fail.

    Whilst it may not be obvious, investment banks actually help companies and countries grow by assisting the flow of capital globally and offering services to clients (corporates or investment funds) to allow them to increase or reduce risk. The decision to incrase or decrease risk often lies with company management and perhaps your anger should be directed towards them.

  • Comment number 98.

    87. At 21:43pm on 19th Jan 2011, DarlingsEyebrow

    That 75bn you are talking about was Joe Publics money in the first place and we could have spent that and paid the VAT! Or invested in GS.

    Get it into your head that it’s not about ‘I want what they’ve got’, it’s about cutting out the cancer that’s having a negative effect on the majority of individuals in society.

    You are correct no one can change the past but you make sure the bad things in the past do not continue or effect the future.

    Destructive is a strange word to use; do you think there are going to be mass riots in the UK? I hope not but we are getting ever so closer to that tipping point. People are getting angry and are starting to lash out, we have seen an increase in the level of vandalism in our area, this is what you get! just the same as the 1970’s.

    I will not let up on the banker bashing and trying to educate people on how retail and investment banking is ruling their lives to the personal benefit of themselves. 7 years ago my youngest at the age of seventeen (17) was given a platinum card with a 10k limit – he was at 6th form but he did work three nights a week as a pot washer – all he needed was a basic current account. Illegal: no, irresponsible and immoral: yes.

    P.S. I have been fighting against the banks for 5 years, not just for today To quote some one on here ‘at least in the 1930’s they had the decency to throw them selves out of the windows’ I do not want this but some humility wouldn’t go amiss.

  • Comment number 99.

    For some time now inflation has been above the pityful interest rates paid by all the British banks who appear to be in league to maximise profits for shareholders and employee bonuses. The people paying for this are the Taxpayers and the millions of people who saved during the the near collapse of these “Nose in the Trough” organisations. The majority of these savers were not responsible for the banking problems.
    The Government should instruct the banks “owned by the people” like RBS etc , to introduce higher interest rates to encourage all savers to transfer their savings from the the “faulty” banks. This would enable the Goverment to exert pressure to start money flowing into small and medium sized firms who are currently being denied this facility. All this direct action might send the greedy bankers a message that some of them could go to the wall if they don’t change their attitude towards the mass of small savers. The Government of this country need to take control to kick start the system.The banks have demonstrated they are incapable of doing this on their own.
    I’m no “Lefty” , but I don’t like being mugged !

  • Comment number 100.

    91. At 22:24pm on 19th Jan 2011, BobRocket wrote:

    "This is all irrelevant, 5 million people in the UK hold the capability of bring the whole banking and national financial system to its knees.

    If 5 million average people in the UK declared bankruptcy tomorrow, all the banks will be bankrupt (such is the wonder of FRB)"

    Are you volunteering?

    Let me get this straight. If a bank makes a loos, they are bad. If a bank makes a profit, they are worse. If a bank breaks even, what then? Is that when they are good? Even mutuals do not do that - look at Nationwide's accounts for even they have surplus

 

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