Amid Falling Profits, Goldman Sachs Is Killing the Wall Street Banker Stereotype

Goldman Sachs CEO David Solomon.

Goldman Sachs CEO David Solomon. Paul Morigi/Getty Images for Fortune

Wall Street powerhouse Goldman Sachs is ditching many stereotypical elements of being an investment banker these days. First, it was suits and ties. Now, it’s bankers’ seemingly endless raises and fat bonus checks.

The prestigious investment bank, the second largest in the world, said on Monday that it had cut its total salaries and benefits package by $798 million to $3.3 billion for the first quarter of 2019 after posting worse-than-expected revenue and profit declines during the three-month period.

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A bulk of this 20 percent downgrade will come from the bank’s bonus pool for 2019, meaning that everyone from senior executives to entry-level analysts could receive a significantly smaller bonus check next January (when they are due to get annual bonuses), depending on the bank’s performance for the rest of the year.

Annual bonuses at the bank ranges from $4,000 to $30,000, according to employee-reported data complied by PayScale.

The pay reduction came just two months after Goldman’s board approved a “forfeiture provision” that could reduce equity-based bonuses granted to several senior executives in 2018 over their ties to the 1MDB scandal.

The fallout of the 1MDB case, which involved the embezzlement of $4.5 billion from Malaysia’s government fund, known as “1MDB,” between 2009 and 2014, continued to impact Goldman’s bottom line in the first quarter, incurring $37 million in legal and regulatory fees for the period, the bank said.

Prosecutors in the case, including the U.S. Justice Department and the Malaysian government, are seeking a total fine up to $7.5 billion from Goldman Sachs for its facilitating role in the crime.

On Monday, Goldman Sachs posted a quarterly profit of $2.25 billion, down 21 percent from a year ago, and $8.81 billion in revenue, a 13 percent drop. Analysts had expected a quarterly revenue of $8.9 billion.

Goldman Sachs CEO David Solomon explained that the poor quarterly performance was partly a result of the bank’s effort to “grow and diversify our business mix and serve a broader range of clients globally,” referring to its recently launched online retail banking business, Marcus.

According to analysis by Pymnts, Marcus contributed to a 30 percent growth in Goldman’s net interest income for the first quarter.

Amid Falling Profits, Goldman Sachs Is Killing the Wall Street Banker Stereotype