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Goldman Sachs protected London employees while 2023 revenues plummeted

2023 was a bad year for Goldman Sachs employees in London.  But it could have been worse. 

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Accounts released today for Goldman Sachs International, the London-based branch of Goldman Sachs, reveal that revenues in the investment banking and fixed income trading divisions, were down 40% or more last year compared to 2022. 

As the chart above shows, London's declining revenues in fixed income trading and investment banking were mitigated by a 54% increase in revenues in investment management and a 20% increase in revenues in equities sales and trading. 

Increased revenues in investment management were illusory, however, and resulted from a $1.42bn gain from the transfer of Goldman Sachs UK asset management business to Goldman Sachs Asset Management International. Without this, asset management revenues would have fallen 28%.

The only area of Goldman's London business that really did well in revenue terms last year, therefore, was equities sales and trading. Here, Goldman said the increase was entirely down to prime financing, the business which deals with hedge funds. And within prime financing, it said the increase was mostly down to "Global Core Liquid Assets (GCLA) held as cash deposits"  in a higher interest rate environment. Revenues from equities market making fell. 

In other words, rising revenues were largely the result of collecting interest payments on hedge funds' cash deposits. Nonetheless, Goldman was gentle with employees. 

As the chart above shows, headcount was cut by less than the decline in revenues in key divisions. 

Asset management employment at Goldman Sachs International fell 37% in 2023. However, this was the result of shifting 300 employees into Goldman Sachs Asset Management International - when this is move is discounted, the implication is that Goldman actually hired nearly 100 people in its remaining wealth management business. In investment banking and fixed income trading, headcount was cut just 7% and 12%. In equities sales and trading, headcount was cut by a larger 17%; it presumably doesn't take much person power to collect interest on deposits. 

Goldman added nearly 50 people in London support functions last year. 

Goldman Sachs London pay 

Goldman also appears to have been gentle with London employees when it came to compensation for 2023 When various accounting adjustments are allowed for and employer's national insurance payments are deducted, the bank paid its average UK employee $511k (£404k) last year, up from $455k in 2022. 

However, this figure may be flattered by the mid-year removal of the 300 asset management staff. More ominously, Goldman's UK accounts show that share-based compensation, usually allocated to staff at mid and senior levels went from $650m in 2022 to $334m in 2023, a decline of 49%.

Goldman Sachs declined to comment. However, 60% of the $334m of share based compensation granted in January pertained to 2022, with the rest spread over the previous three to five years. Share based compensation specifically for 2024 won't be disclosed until accounts are released next year. 

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Photo by Nick Fewings on Unsplash

AUTHORSarah Butcher Global Editor

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