Goldman Sachs is planning to dole out fat bonuses to its star bankers, according to a report — despite tanking profits at the bank and reports that this year will be a clunker for end-of-year payouts across Wall Street.
The financial giant helmed by Chief Executive David Solomon is looking to keep its top performers happy this year after many were disappointed with skimpy bonuses last year, Reuters reported on Tuesday.
Solomon and other senior executives have been quietly meeting with Goldman partners to promise top bankers, traders and asset managers will be paid well this year, according to the report –despite the fact the bank has seen earnings dip 34% in the first three quarters of 2023.
A source close to Goldman said the bank “feels confident about the outlook ahead and wants to make sure it has its team in place.”
Grappling with losses in its consumer business and facing a slowdown in dealmaking, Goldman has suffered a rash of recent departures that may have spooked management enough to loosen the purse strings, insiders said.
Over the last few years departures included Julian Salisbury, Luke Sarsfield, Jeff Currie, Omer Ismail, Katie Koch, Harvey Schwartz, Gregg Lemkau, Eric Lane, Stephen Scherr and Dina Powell.
A spokesperson for the bank said in a statement, “Our compensation philosophy hasn’t changed, we’re always focused on investing in our people, especially our top performers. We’re not going to comment on premature speculation around the comp cycle.”
Elsewhere on Wall Street, bankers are facing bonuses that could shrink as much as 25% as dealmaking dries up amid surging interest rates, according to a new survey.
Investment bankers will get hardest, with year-end bonuses dropping between 15% and 25%, according to Johnson Associates, the compensation consulting firm behind the report.
Workers in retail and commercial banking, meanwhile, could see spikes as high as 10%.
“Most Wall Street professionals will have to wait another year for a rebound in year-end bonuses,” said Alan Johnson, managing director of the firm. “For most… it will be another disappointing year.”
While Investment banking advisory continues to be in the doldrums, investment banking underwriters, who have been raising debt financing, can expect a small pay bump of 5% to 10%, the study said.
Meanwhile, retail deposits have surged at major commercial banks and those higher margins will boost pay. But for regional bankers – doing similar work at smaller institutions – pay will decline 10% to 20% amid massive outflows of cash, according to the study.
Hedge fund bonuses will be tied to the fund’s performance — and could either dip 5% or increase 5% depending on the fund’s year. Equities trading bonuses will fall between 5% and 10% while fixed income trading bonuses will be relatively flat, the survey found.
Wealth management — which has attracted new clients this year — could see a 5% increase in bonuses. Asset management — which saw profits fall this year — will see a marginal decline in bonuses of between 5% and 10%.