Goldman Cuts Compensation and Jobs as Revenue Drops to Lowest Since 2005

Bloomberg reports that compensation, which includes salaries, benefits, bonuses and the expense of deferred pay awarded in prior years, fell 14% to $7.29bn in the first six months of the year, the New York-based bank said in a statement Tuesday. Revenue in the same period dropped 14% to $16.6bn.

CEO Lloyd Blankfein, 57, has cut 1,000 jobs this year to counter the slowest first-half since before he became Chairman and CEO in mid-2006. Trading, which contributed about 60% of the bank’s revenue in 2011, dropped 6% in the first half from a year earlier. Blankfein said last month he thinks the slowdown is a temporary reaction to the financial crisis.

Blankfein said: 'During the second quarter, market conditions deteriorated and activity levels for both corporate and investing clients were lower given continued instability in Europe and concerns about global  growth. Still, we remain focused on meeting our clients’ needs, while prudently managing our capital, liquidity and risk'.

CNBC reports that Goldman comfortably beat analyst estimates the firm's investment in Industrial and Commercial Bank of China Ltd resulted in a $194m loss during the quarter. Other public equity investments lost $112m, and overall its lending and investing division reported an 81% decline in net revenue, to $203m from over $1bn a year earlier.

In the meantime, Reuters reports that State Street, already a major service provider to hedge funds, said on Tuesday it will pay $550m to buy Goldman Sachs' hedge fund administration unit, making it the No. 1 in the world in that business.

State Street said the acquisition, which does not include Goldman's prime brokerage business, is expected to add to earnings in its first full year of operations on a cash basis.