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Goldman Sachs set aside $12bn to pay staff in 2011

The Wall Street investment bank reported full year revenue of .8bn – down 26% – while earnings almost halved to .4bn

Goldman Sachs set aside .2bn (£8bn) to pay its staff in 2011 – an average of 7,000 each – as the Wall Street firm used a greater proportion of its revenue to pay staff than a year earlier.

In 2010 the bank used 39% of its revenue for pay but for 2011 used more than 42% of revenue to pay its 33,300 staff around the world who begin to learn the size of their annual bonuses in the coming days.

The highest profile firm on Wall Street reported better than expected full year revenue of .8bn – down 26% – while earnings almost halved to .4bn.

Lloyd Blankfein, chairman and chief executive of Goldman, blamed “global macro-economic concerns” for the fall in business but said the firm had been “prudently managing risk, capital and expenses”.

The firm axed 7% of its staff during the year and the total payout per staff of 7,000 – a figure which includes salaries, bonuses, equity awards and benefits - was down 15% on the 0,000 the previous year. The actual amount set side to pay staff at .2bn was down 21%.

“This past year was dominated by global macroeconomic concerns which significantly affected our clients’ risk tolerance and willingness to transact,” Blankfein said.

“As economies and markets improve – and we see encouraging signs of this – Goldman Sachs is very well positioned to perform for our clients and our shareholders”.

The firm has recently provided more disclosure than in the past about its pay deals in the UK as a result of rules set out by the Financial Services Authority requiring firms to publish pay for “code staff” – those taking or managing risk. Regulatory filings for Goldman Sachs Group Holdings (UK) show that it had 95 code staff in 2010 who had an average pay deal of .2m £4m) in 2010 – and had a further 5m awarded in a one-off mid-year award of shares in 2010.

The turmoil in the eurozone held back many of its business areas. Revenues in investment banking were down 9% while its business that underwrites share offerings was down 14%. Its fixed income, currency and commodities operations suffered a 34% fall in revenue.

“Although activity levels during 2011 were generally consistent with 2010 levels, and results were solid during the first quarter of 2011, the environment during the remainder of 2011 was characterised by board market concerns and uncertainty, resulting in volatile markets and significantly wider credit spreads, which contributed to difficult market-making conditions and led to reductions in risk by the firm and its clients,” the firm said.

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