Morning Coffee: Goldman Sachs and the undeserving 20%. The boozy Jabba the Hutts of finance
Goldman Sachs, the investment bank that has always insisted that it will continue to pay for performance as its competitors bemoan compensation ratios, has handed out donuts to 20% of its staff.
This time last year, Goldman was beginning to roll out a series of lay offs that would cut deeper than its annual pruning of investment bankers. Now, about 100 bankers will receive no bonus at all for 2016, according to Bloomberg. This comprises members of the “lowest quintile”, as Goldman judges its annual review – or around 20% of people.
Whatever you think bout Goldman Sachs or the concept of investment bankers receiving bonuses, this is big. In previous years, even those who failed to shine at Goldman still got something. The bank’s move is not simple cost-cutting, it sends a clear message – if you don’t like this, move on.
For most Goldman bankers, bonuses have been so omnipresent that they’ve come to rely on them as part of their annual income and tend to try and work out what they’re likely to receive throughout the previous year. To be handed a “goose egg” is bad news for many.
The same can be said for others at cost-cutting banks. At Deutsche Bank, for example, which has taken similar punitive measures to cut bonuses entirely for large swathes of staff, VPs with “a need for a huge amount of cash” have been left comparatively impoverished.
The timing at Goldman also seems particularly harsh - its shares have just reached a 10-year high.
Separately, for bankers in New York, the City of London’s boozy pub culture is difficult to fathom. But many a deal has been sealed over the all-important boozy lunch. Now, however, Lloyds of London has imposed an alcohol ban between the hours of 9-5 for its 800 employees.
It’s important to note that this prohibition applies only to its own staff, not the hundreds of brokers and underwriters who do business there. A good job too – as the FT reports, the drinking culture is still alive and well in insurance.
“There is still a short hours and long lunch culture in some places and there are stories of brokers sitting in pubs handing out contracts like Jabba the Hutt,” one person told the FT.
However, around half of all grievances and disciplinary procedures at Lloyds were related to alcohol abuse. Still, it hasn’t gone down well.
“Did I just wake up from my drunken drug induced slumber to find we are now living in Orwell’s 1984?,”said one employee on the intranet, according to the Evening Standard.
“Lloyd’s used to be a fun place to work. Now it is the PC capital of the world where you can’t even go out for a lunchtime pint anymore?”
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