What Goldman said
In case you didn't hear the study in evasiveness that was the Goldman Sachs first quarter webcast, here's a very summarised account of what was said in relation to pay, business conditions, client satisfaction and (briefly) Abacus.
On pay
50% compensation ratios are starting to look distinctly anachronistic.
Goldman reiterated several times that compensation is a function of three things: 'performance', 'competitive positioning' and the 'external environment.' Early in the call, David Viniar also said 'going forward compensation ratios will continue to be influenced by the changed environment.'
We take this to mean that 40% is the new 50%.
On business areas
Investment banking really doesn't look great - both at Goldman and across the industry. Goldman said the pipeline now is only as strong as it was at the end of the 4th quarter, although things should improve as the global economy picks up.
Fixed income, currencies, and commodities, meanwhile, are going great, with competition between banks increasing, but strong performance across all product areas, and across all regions globally.
The equities business is also looking good, but equity derivatives is looking particularly good and now accounts for around 50% of Goldman's equities revenues. High frequency trading also appears to be becoming more substantial, with lower VaR partly attributed to higher turnover.
On clients
Despite what's going on with the SEC, clients still love Goldman. The "broad and deep" client franchise drove all the success in Q1, and Goldman says clients will be happy as long as, "we continue to perform."
In FICC, clients also liked, "the breadth and depth" of the portfolio and the, "willingness to find
liquidity."
On the UK bonus tax
It's not included in the Q1 comp numbers, but is registered as a separate one time hit.
On Abacus
"We would never mislead a client. On the contrary...."
"These were two professional investors. Each had the resources to properly analyse the reference portfolio of securities, which was fully itemised for them."
"It didn't matter what was selected here - if you bought the 2006 vintage you got crushed no matter what."
(Goldman also hinted at the possibility that it might be willing to settle out of court by saying that the matter could be settled 'at any time'. Less promisingly, Goldman declined to say whether it had received additional Wells notices (formal notifications of SEC investigations), implying that it has and may face further charges.)
