'Someone’s going to be disappointed'.
Goldman Sachs, which set Wall Street pay records when stocks surged and cheap credit abounded in 2007, is again leading the industry as markets boom anew: putting aside less money for staff and more for investors.
Bloomberg reports that Goldman Sachs, along with the investment-banking divisions of six of its biggest U.S. and European rivals, allocated a collective 39% of revenue for compensation in the first nine months, down from 42% a year earlier and the 50% some firms earmarked before the financial crisis. Goldman Sachs’s 41% ratio so far this year is its lowest nine-month figure as a public company.
Rising revenue at many banks is stoking employees’ hopes for larger bonuses, after year-end payouts were cut in the wake of the financial crisis and packed with restricted stock, which vests over time. Firms instead are preparing to shrink compensation for individuals amid investor pressure to improve return on equity. The measure of profitability stands at 10% or lower at each of the five biggest Wall Street banks - less than half the levels that preceded the credit crisis.
'Someone’s going to be disappointed', said Joe Jolson, co-founder and chief executive officer of JMP Group, the San Francisco-based investment bank. It will be 'bankers that haven’t really been paid any real cash bonuses for five years, or the shareholders of these companies'.
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