Your Future Tax Dollars at Work
Goldman Sachs ready to hand out £7bn salary and bonus package… after its £6bn bail-out
By Simon Duke
Last updated at 8:55 AM on 30th October 2008
U.S. investment bank Goldman Sachs HQ which has set aside £7bn for bonuses and salaries this year
Goldman Sachs is on course to pay its top City bankers multimillion-pound bonuses – despite asking the U.S. government for an emergency bail-out.
The struggling Wall Street bank has set aside £7billion for salaries and 2008 year-end bonuses, it emerged yesterday.
Each of the firm’s 443 partners is on course to pocket an average Christmas bonus of more than £3million.
The size of the pay pool comfortably dwarfs the £6.1billion lifeline which the U.S. government is throwing to Goldman as part of its £430billion bail-out.
As Washington pours money into the bank, the cash will immediately be channelled to Goldman’s already well-heeled employees.
News of the firm’s largesse will revive the anger over the ‘rewards for failure’ culture endemic in the world of high finance.
The same bankers who have brought the global economy to its knees seem to pocketing the same kind of rewards they got during the boom years.
Gordon Brown has vowed to crack down on the culture of greed in the City as part of his £500billion bail-out of the UK banking industry.
But that won’t affect the estimated 100 London partners working at Goldman Sachs’s London headquarters.
The firm – known as Golden Sacks for the bumper bonuses it pay its top bankers – is expected to cut the payouts by a third this year. However, profits are
falling much faster. Earnings have plunged 47 per cent so far this year amid the worst financial crisis since the Great Depression.
This has wiped more than 50 per cent off the company’s market value.
The news comes after it was revealed that even bankers working for collapsed Wall Street giant, Lehman Brothers, could receive huge payouts.
Its 10,000 U.S. staff are expected to share a £1.5billion bonus pool. The payouts were agreed as part of the rescue takeover of Lehman’s American arm by Barclays last month.
The blockbuster handouts caused consternation among London employees of the firm, many of whom have now lost their jobs.
Even workers at the nationalised Northern Rock will scoop bonuses worth up to £50million over the next three years.
The extraordinary handouts include more than £400,000 for Rock’s boss, Gary Hoffman, who is likely to become Britain’s best-paid public sector worker.
The majority of Northern Rock’s 4,000 workers will receive four separate bonus payments – the first of
which will be made next March. Staff will get an extra 10 per cent on top of their basic salary.
Lloyds TSB also intends to pay its employees bonuses despite taking a £5.5 billion emergency cash injection from the taxpayer.
News of Goldman’s bonus plan came as the firm promoted 92 of its bankers to partner level. A quarter are based in Fleet Street, London.
Partnership is the holy grail of the investment banking world as the exclusive club shares around a fifth of the firm’s total bonus pool.
New York Attorney General Andrew Cuomo last night warned that Wall Street firms taking government-money risk breaking the law if they hand the cash straight back to employees.
Cash-strapped workers are being penalised by pay rises which are far below the soaring cost of living, research reveals today.
Despite inflation soaring to a 16-year-high of 5.2 per cent, the average worker got a pay rise of just 3.8 per cent in September.
The research, from the pay specialists Incomes Data Services, highlights the financial problems facing millions of workers.
Most of their household bills, particularly food and fuel, are rocketing by up to 35 per cent. However, their meagre pay rise does not begin to cover the extra cost.
The majority of the 50 pay settlements investigated by IDS were in the private sector covering around 1.1million employees.
They range from just 2 per cent for workers at the BBC to 5.3 per cent for workers at a firm of dockyard workers.
Incomes Data Services warned pay rises are likely to fall even further over the coming year as inflation is expected to drop sharply.
Economists predict inflation will fall below the Government’s 2 per cent target next year.
This, and my post about dividend payments.
I wish I could be be surprised, but who didn’t see this coming? Certainly not the inside investors!
We’re all in the wrong business.