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Goldman Sachs Warns Traders Of Shrinking Bonus Pool Even As Trading Revenue Rises

Leading global investment bank Goldman Sachs Group Inc (NYSE: GS) recently announced a shrinking year-end bonus for traders, despite seeing its trading revenue rising this year. 

Goldman’s annual trading revenue is $25 billion, and analysts estimate it will outdo last year’s mark by 15%. However, the company’s overall revenue fell by 21%.

The bank has said it is currently dealing with a slowdown across its businesses, especially investment banking and asset management, Reuters reports.

The slowdown is primarily due to surging interest rates and falling company valuations. Bloomberg has reported that earlier this week, the bank informed its executives in the global markets division to expect a smaller bonus pool for 2022.

Goldman’s return on equity stood at 12% for the first nine months. However, Bloomberg reports that the company’s leaders are trying to prevent the bank from losing ground.

View more earnings on GS

Also Read: Goldman Sachs Boss Predicts Recession, Warns Risk-Based Businesses: 'Time To Be Cautious'

Goldman is already struggling to protect its profitability after the recent foray into the consumer banking segment, which has been impacted by a global slowdown in other business lines such as dealmaking.

“We always tell people their bonus is based on how they did, how their group did, and finally how the company did,” a person with knowledge of the company’s processes told Bloomberg. “This year, some of the good money traders made will have to go fund the other parts of the bonus pool.”

Last month, compensation consultant Johnson Associates reported that bankers across Wall Street would likely see their bonuses decline as much as 20% in 2022. In addition, their counterparts in underwriting could see their incentive pay going down as much as 45%.

Photo: Courtesy of World Bank Photo Collectio on flickr 

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