Goldman Sachs bankers are reportedly at risk of having their bonus pool slashed by up to 40%, in what could be the lender’s largest cut to payouts since the 2008 financial crisis.
The bank is still in the process of deciding the size of its bonus pools for 2022, but the prospective cut could mean its 3,000 investment bankers endure the most significant drop in variable pay among their peers, according to the Financial Times, which first reported the news.
Other major Wall Street banks, including JPMorgan Chase, Bank of America and Citigroup, are also reportedly considering cutting their pay for bankers by roughly a third.
Investment banks have recorded a drop in demand this year after Russia’s invasion of Ukraine, which rattled global markets, and made companies more cautious about pursuing corporate deals and raising money on the financial markets, for fear their shares or debts would be undervalued.
That compares with a boom in investment banking in 2021, when easing of Covid restrictions resulted in a flurry of corporate activity that pushed investment bank profits to record highs.
Goldman said in October that its investment banking revenues slid 57% in the third quarter to $1.6bn (£1.3bn) compared with a year earlier, due to a slump in merger and takeover activity, as well as equity and debt underwriting. It contributed to a 44% drop in overall profits in the three months to September.
That slump will play into Goldman’s decision on bonuses, which are likely to be finalised this month, before being announced and paid out in January.
The cuts will affect about 3,000 investment bankers, who make up a small portion of the lender’s 49,000 global staff. About 6,000 of Goldman’s employees are based in the UK, with all investment bankers based in London.
“Compensation at Goldman Sachs is determined by the performance of the entire bank, not within each business area,” Goldman Sachs said in a statement. “The compensation process is not yet completed so any discussion or forecast on specific numbers is premature.”