Pay and bonuses for bankers at Goldman Sachs have increased by 17% as profits at the Wall Street giant more than doubled in the second quarter.
The bank said its 45,300 staff received $4.2bn (£3.2bn) on compensation and benefits in the three months to June, up almost a fifth from the same period last year. That figure includes salaries and pensions, as well as the amount set aside for individual bonuses given out at the end of the financial year.
Profits at Goldman have soared because of a jump in business deals, with its investment bankers helping guide firms through a fresh wave of mergers and takeovers such as ExxonMobil’s $60bn takeover of Pioneer Natural Resources in May, a deal in which Goldman acted as a broker alongside Morgan Stanley and Citigroup.
Goldman has spent $8.8bn on compensation and benefits for staff since January, which the bank said reflected “improved operating performance”. Financial filings show that Goldman’s profits surged 150% to $3bn in the second quarter, up from $1.2bn last year.
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The brighter economic outlook, coupled with expectations that the US Federal Reserve and Bank of England will cut interest rates, has boosted demand for bank services.
The improvement in conditions will lead to larger bonuses for Goldman’s 6,000 UK staff, particularly now that the banker bonus cap that limited bonuses to twice the individual’s salary has been removed. Goldman was among the first banks to take advantage of the removal of the cap earlier this year, despite it going against EU rules.
David Solomon, Goldman’s chairman and chief executive, said: “We are pleased with our solid second-quarter results and our overall performance in the first half of the year, reflecting strong year-on-year growth in both global banking and markets and asset and wealth management.”
The UK bonus cap was introduced in the aftermath of the 2007-08 banking crash with the aim of ending a bonus culture blamed for encouraging short-term profits over longer-term stability. It was removed by the previous government on 31 October last year.
The new chancellor, Rachel Reeves, has said the government had no plans to reinstate the banker bonus cap despite Labour being opposed to the cap’s removal last year.
In May, Richard Gnodde, the chief executive of Goldman Sachs International, said the bank would be changing its pay structure, which would give hundreds of its highest-earning staff the ability to make 25 times their salaries in bonuses.
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