US investment bank Goldman Sachs is expected to reveal a pay and bonus pot of $20bn (£12.3bn) for 2009 tomorrow, reigniting the row over City pay and taking the total amount being paid out by Wall Street financiers to more than $65bn.
Goldman has made sure to report after its rivals in an attempt to deflect public attention from its profits and bonuses, which are forecast to top more than $600,000 per person on average.
The Wall Street firm's 32,000 staff are also being forced to wait until next week to discover the size of their individual payouts – in contrast to rivals at JP Morgan and Morgan Stanley, who began learning the size and structure of their bonuses today.
Employees at Morgan Stanley, which revealed today it had set aside $14.4bn for pay and bonuses in 2009 despite showing a net loss, were told they would be paid in a variety of ways, including "three-year performance stock units for senior executives, equity subject to market risk that vests over three years, and deferred awards subject to clawback".
Morgan Stanley's new chief executive, James Gorman, will receive his bonus in deferred compensation rather than cash while members of the operating committee will receive about 75% of their year-end pay via deferred methods.
Figures reported so far by Wall Street's biggest players – JP Morgan, Morgan Stanley, Citigroup, Bank of America – show they are ready to hand out salaries and bonuses of more than $45bn for 2009. That rises to $65bn on the assumption that Goldman's compensation costs are $20bn. If payments to all staff working in bank branches and other businesses are included, the total tops $100bn.
The chancellor's 50% tax on bonuses of more than £25,000 has had an influence on many of the banks. Morgan Stanley said the cost of the tax would be "shared significantly" among its staff and not be borne entirely by its 7,000 employees in the City.
Morgan Stanley used 62% of its revenues to pay employees in 2009, the highest ratio in more than a decade, and the $14.4bn set aside for pay was a 31% rise in on last year because of the recruitment of extra staff. The ratio drops to 50% if certain charges incurred by the bank are excluded.
Morgan Stanley reported a net loss for the year, although this becomes a profit of $1.15bn for 2009 on a continued-operations basis, compared to an $807m loss for 2008, as its traders, clients and investors capitalised on a revival in equity and debt markets.
Bank of America, which fell into the red with an annual loss of $2.2bn despite a recovery in the fortunes of its Wall Street brokerage Merrill Lynch, incurred a total bonus and salary bill of $31bn. It does not split this figure up into subtotals for each of its divisions, but its investment banking arm has enjoyed a dramatic improvement following the near-meltdown in the financial system last year.
Bank of America's global markets division, which includes Merrill Lynch, which it acquired just over a year ago, swung from a $4.9bn loss to a $7.2bn surplus, aided by a rapid, aggressive recovery in shares and debt markets.
But other of its businesses fared less well. In a sign of ongoing recession-related stress among its customers, Bank of America revealed a $5.6bn loss at its global credit cards division as bankruptcies soared and cardholders struggled to find the money for repayments.
Bank of America's newly appointed chief executive Brian Moynihan, who took over from widely criticised Ken Lewis at the beginning of the month, said there were positive indications on the horizon: "As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilisation of our credit costs, particularly in the consumer businesses."
But he added: "That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth."
