(NEW YORK) -- Goldman Sachs CEO Lloyd Blankfein's bonus will be cut to $7 million this year from $12.6 million the year before, according to Equilar, an executive compensation data firm. Goldman's heaviest hitters, as a group, will see their bonuses reduced by almost half. They are but the most recent group of traders to feel the bite of Wall Street pay cuts.
Consulting firm Options Group had predicted as much in a November report, saying it expected to see compensation at the biggest Wall Street banks sink by 27 percent to 30 percent to the lowest levels seen since the 2008 financial crisis.
"Obviously this is not a good year for Wall Street compensation and an awful lot of the pressure is going to fall on managing directors," said Brad Hintz, research analyst with Sanford C. Bernstein & Co. Bankers in the fixed income market and in credit trading, he said, would be hit hardest.
Goldman's earnings fell 58 percent in the last quarter of 2011. Revenue was lower than expected. Blankenfein in a January statement said the bank's results were the result of "global macro-economic concerns which significantly affected our clients' risk tolerance and willingness to transact."
In January, investment bankers at Bank of America were told to expect compensation cuts of up to 25 percent, according to Bloomberg.
Bank of America reported earnings of $2 billion in the last three months of 2011, up from a net loss of $1.2 billion in the same period a year ago, boosted in part from a one-time gain on the sale of China Construction Bank. During a conference call last week, Bank of America's CEO Brian Moynihan revealed the failed plan to impose a $5 debit card monthly fee contributed to a 20 percent increase in closed accounts in the last three months of 2011.
The top executives at JPMorgan Chase, Citigroup, and Morgan Stanley also received stock award pay cuts of 15 to 25 percent after the banking giants' shares took a beating in 2011. But like the heads of the United Auto Workers union after GM and Chrysler took bailouts, banking execs' pay packages are still eye-popping considering their companies were bailed out few years ago.
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