Goldman Sachs has slashed 20% from the cash it sets aside to pay bankers’ bonuses after reporting lower profits in the first three months of the year.
The Wall Street firm said it was cutting its salaries and benefits pot by $798m (£609m) to $3.3bn, a move that will hit executives, senior managers and lower-level staff.
Some of the cuts will have been covered by a 2% drop in staff numbers but the bulk of them will affect Goldman’s annual bonus pool for 2019.
Depending on the bank’s performance throughout the rest of the year, it could result in smaller payouts for Goldman bankers next January, when staff usually receive their bonuses. The pay pool rose 6% last year.
Goldman said the significantly lower pay and benefits for the past quarter reflected a decline in operating performance over the period.
The lender’s first-quarter results showed a 21% fall in profits in the first three months of the year to $2.3bn compared to $2.8bn in the same period last year. Rival JP Morgan last week celebrated record profits of $9.2bn.
However, Goldman’s chief executive, David Solomon, said he was pleased with the bank’s performance.
He said the bank was “focused on new opportunities to grow and diversify our business mix and serve a broader range of clients globally”, a reference to its expanding retail bank operations. Goldman launched its online bank Marcus in the UK last year.
The bank is also dealing with the fallout of the 1MDB scandal, which has involved multiple investigations into corruption at the Malaysian sovereign wealth fund. Goldman said it has set aside $37m to cover legal and regulatory costs for the period.
