Goldman Sachs has cut the amount it spends on paying London bankers by almost 60% in the first half of 2022, reflecting what is expected to be a much lower year for dealmakers’ bonuses.
The US investment bank spent just over $1 billion on compensation for staff at Goldman Sachs International, which hosts its European business, compared with $2.5 billion a year earlier, according to the accounts published this month.
That’s an average payout of about $265,400 for the first six months of this year, compared to $644,000 for the same period in 2021.
Goldman said in a statement accompanying the results that a 33% drop in overhead was “primarily due to significantly lower compensation.”
TO READ Goldman Sachs cuts payout by 30% as trading fees fall
Overall, profits at Goldman’s international unit rose 90% in the first six months of 2022 to $2.4 billion, thanks to the strong performance of its business units and cost reductions.
Last year’s boom in deals pushed wages at Goldman Sachs to their highest level since the boom years before the 2008 financial crisis, as fees rose to $130 billion across the sector
However, a fall in trading so far in 2022 is expected to hit bankers’ pay packets. A closely watched report by Wall Street compensation consultants Johnson Associates predicts a 45% drop in bonuses for bankers who underwrite debt and equity deals and a 25% drop for those advising on mergers and acquisitions.
In its international operations, Goldman earned $531 million in investment banking fees in the first six months of 2022, down 61% from the same period last year.
The bank said this was largely due to a decline in equity and debt capital markets transactions and that its investment banking portfolio was higher than last year, largely due to possible merger and acquisition transactions.
Meanwhile, revenue within its fixed-income trading unit rose 59% to $2.7 billion, and equity trading rose 2% to $2.5 billion. So far this year, Wall Street banks have offset sharp declines in investment banking fees with strong performance in their business units.
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