Pity Goldman Sachs employees: their average salary and bonus this year for around 30,000 staff will likely tumble from $431,000 to $385,000; that's $2.7bn down overall on the $15.3bn paid out in 2010, leaving the pay and bonus pot at $12.6bn.

The announcement of the amount of expected collective remuneration of its staff comes alongside expected annual losses for the bank.
Goldman will publish its fourth quarter results today and, thanks to a dearth of IPOs and deal-making, a regulation clamp down, and generally lower trading volumes, results are unlikely to be stellar. Far from it.

Smaller pot

Pay cuts or freezes, less business around, difficult market conditions... Not an environment Goldman Sachs employees like or are used to. Comparisons with other banks? JPMorgan Chase & Co announced last week a 23% drop in profits for the last quarter. Net income for JPMorgan was $3.73 billion: a considerable drop from $4.83 billion for the same period a year earlier.

What these investment banks have to do is manage the balance between paring back too much on staff numbers in order to compensate for revenue declines. Goldman is already axing 1,000 jobs in an effort to slash costs.

Investment banks are being hit not only by the ongoing eurozone worries, but also the upcoming Paul Volcker rule, designed to clamp down hard on banks betting with their own cash to boost profit margins, including investing in hedge funds and private equity.

Regs pressure

This rule is having a tough time from the financial industry, with widespread exemptions being called for - it's also a rule riven with footnotes and an extremely long preamble: quite a monster. And the more complex that rules become, the more - paradoxically - they are easier to dodge. So the jury is out on how much the Volcker rule will hurt the profits of Goldman Sachs and the like in future.

Expect the investment banks to find a way through. But Goldman is likely to fare worse than other banks in the medium term given the sheer weight of revenues made from trading. Some of its staff may need to continue to subsist on $385,000 a year.

Gallery: What do bankers spend their bonuses on?




What do bankers spend their bonuses on?