Goldman buoyed by 140% fee forecast

Goldman Sachs has recorded the largest quarter-on-quarter increase in investment banking revenues among its global rivals this year, according to new research, with fee income more than doubling in the three months to the end of June compared to the first quarter.

Revenues from debt and equity underwriting, and mergers and acquisitions at Goldman Sachs hit $1.31bn (€931m) in the second quarter, a 143% increase on the first three months of the year, while the world’s top bank’s on average recorded a 64% increase over the period, according to Morgan Stanley analysis of Dealogic data.

Equity capital market was largely responsible for the increase in Goldman Sachs’s performance, with revenues rising 1,338% in the second quarter to $850m, while the bank’s M&A income fell 15%.

Goldman is due to release its second quarter results on July 14. The bank declined to comment.

The world’s largest fee earner remains JP Morgan, which made $1.7bn over the last three months, a 111% increase on the $804m it made in the first quarter, while Bank of America Merrill Lynch completes the top three with a fee income for the period of $1.02bn, up 65%.

Morgan Stanley analysts wrote: “Whilst these are just the ‘IBD’ part of the business, we think they are directionally illustrative of what else we see, with a flourishing range of businesses – such as credit, equities and commodities.”

Europe’s best performing bank in terms of the percentage increase in its investment banking fee income was Calyon, which recorded a 66% increase taking its revenues to $192m, while Credit Suisse made the most money of any bank in the region, generating fees worth $791m.

Credit Suisse is part of a group of banks, including JP Morgan and Deutsche Bank, that Morgan Stanley has called ‘flow monsters’, which have won a disproportionate share of investment banking fees so far this year.

http://www.wealth-bulletin.com/home/rss/content/1054618495/

 

Goldman to make record bonus payout

The following correction was printed in the Observer's For the record column, Sunday June 28 2009

In the article below, we made reference to "guaranteed rewards that were paid over three years". In fact, Goldman Sachs has a policy of not paying multi-year guarantees, and variable compensation for its employees has always been driven by the performance of the firm.

Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm's second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company's shares in January, has already made a $1bn gain on his investment.

Goldman is expected to be the biggest winner in the race for revenues that, in 2006, reached £186bn across the entire industry. While this figure is expected to fall to £160bn in 2009, it will be split among a smaller number of firms.

Barclays Capital, Credit Suisse and Deutsche Bank are among the European firms expected to register bumper profits, along with US banks JP Morgan and Morgan Stanley following the near collapse and government rescue of major trading houses including Citigroup, Merrill Lynch, UBS and Royal Bank of Scotland.

In April, Goldman said it would set aside half of its £1.2bn first-quarter profit to reward staff, much of it in bonuses. It is believed to have paid 973 bankers $1m or more last year, while this year's payouts are on track to be the highest for most of the bank's 28,000 staff, including about 5,400 in London.

Critics of the bonus culture in the City said the dominance of a few risk-taking investment banks is undermining the efforts of regulators to stabilise the financial system.

Vince Cable, the Liberal Democrat treasury spokesman, said: "The investment banks more than any other institutions created the culture of excessive leverage, excessive risk and excessive bonuses that led to the downfall of the financial system. Now they are cashing in and the same bonus culture has returned. The result must be that we are being pushed to the edge of another crash."

Goldman Sachs said it reviewed its bonus scheme last year and switched from a system of guaranteed rewards that were paid over three years to variable payments that tied staff to the firm. It told employees last year that profit-related bonuses would be delayed by 12 months.

Until the release of its first quarter profits in April, it seemed inconceivable that a firm owing the US government $10bn would be looking to break all-time records in 2009.

David Williams, an investment banking analyst at Fox Pitt Kelton, said: "This year is shaping up to be the best year ever for investment banks, or at least those that have emerged relatively unscathed from the credit crisis.

"These banks are intermediaries in the bond markets where governments and companies are raising billions of pounds of new money. There is also a lack of competition that means they can charge huge sums for doing business."

Last week, the firm predicted that President Barack Obama's government could issue $3.25tn of debt before September, almost four times last year's sum. Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.

http://www.guardian.co.uk/business/2009/jun/21/goldman-sachs-bonus-payments

 

if usa didnt give aig all that money which in turn sent a great deal of it to goldmans,,they would be out o bidness already, robbed peter to pay paul

 

Yeah, they definitively benifitted from some good old sleigh of hands. Is it already business as usual for those surviving banks?

 

And what are they spoonfeeding us (them) ...Michael Jackson.