Goldman Sachs' expatriates face pay cut or move home

The US investment bank has asked staff who work abroad in its middle office, such as its risk management, futures and prime brokerage departments, to return in the next two months.

The decision could save Goldman tens of thousands of dollars per person affected, according to experts, and suggests firms are continuing to look at ways to slash their personnel expenses after multiple rounds of job cuts.

Goldman said it had not changed its expatriate packages, but the move was confirmed by two sources within the bank. The numbers affected at Goldman are small, but lawyers warned that other investment banks could implement similar cost-cutting exercises.

Fraser Younson, head of employment law in the London office of US law firm McDermott, Will and Emery, said he could see other banks trimming extras available to expatriates, such as rent allowances and utilities bills.

Goldman compensation and benefits rose in the first quarter of 2003 to $2.1bn (€1.9bn), up 16% on the same period last year, while the number of employees fell. The bank employed about 18,950 at the end of the first quarter of this year, down 4% on 19,739 at the start of the year - which was in turn down 13% on the beginning of 2002.

Investment banking expatriate packages have been high, particularly in the UK, since US professionals moving to London in the 1980s asked to be paid as many pounds as they were paid dollars in the US.

A US expatriate in London can cost a bank as much as their salary again, according to Peter Christie, a remuneration partner at consultancy Watson Wyatt.