Goldman Cuts Salaries of London Bankers
A person familiar with the situation says salary increases given to investment bankers at Goldman Sachs' London office in 2009 will expire, as expected. The news will affect some, though not all of the investment bank's 5,500 employees in its London-based European headquarters.
Cost savings from this move are not likely to be folded into the $1.2 billion in compensation and noncompensation costs the bank said it plans to cut over the next year. During the second-quarter conference call, Chief Financial Officer David Viniar said compensation costs would come from headcount reduction, not compensation reduction.
There is no word as to how much this might save the bank. Goldman declined comment.
The bank raised base salaries in 2009 after officials in the U.K. urged banks to dial down on bonuses. The clause allowed for base salaries to be increased for two years.
Last year, the bank increased base salaries for a number of top level executives including Chief Executive Lloyd Blankfein, whose base salary rose to $2 million from $600,000. Higher base salaries add to a bank's fixed costs and Goldman's struggling right now. Revenue dropped 11% in the first six months of this year from the same period in 2010, while earnings fell 48%.