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Goldman Sachs’s bonuses are going the way of its shrinking business

January 16, 2014
January 16, 2014

Goldman Sachs, the, er, gold standard for bank bonuses, appears to be losing its magic touch.

The New York-based investment bank’s bonus packages for its 32,900 staff, announced internally this morning, are flat to down relative to last year’s bonuses, sources tell Quartz. Some bankers are seeing cuts as great as 5% to 10% in some areas, said one person familiar with the firm’s pay.

The bonuses for US and European staff were communicated this morning after CEO Lloyd Blankfein, president Gary Cohn and CFO Harvey Schwartz held a meeting with the firm’s managing directors to discuss the firm’s performance.

A Goldman spokesman declined to discuss individual bonuses.

Overall compensation is down about 3% compared to a year ago. That reflects the bank’s 19% profit decline thanks to weak bond, currency and commodity trading. Goldman set aside $12.61 billion in compensation for 2013, which translated into an average pay of roughly $383,000 per employee—one of its lowest compensation levels since the financial crisis began.

That said, in some areas of the bank, pay is still going up. Bankers in leveraged finance, which is driven by corporate refinancing loans as well as mergers, and equity markets fared well, said one insider, who described Goldman’s pay as “a mixed bag.”

“There are parts of the business that had a really big year,” one source said pointing to the firm’s equity capital markets that handled Twitter’s initial public offering last November.

The company has yet to nail down pay levels for other countries like the UK, where regulators have been trying to rein in bonus pay. It may end up increasing the base salaries of its London staffers to compensate for lower requirements on bonus pay. But that would be a tough pill to swallow, since bumping salaries is a longer-term play than shelling out one year of bonuses.

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