A possible explanation for the large, immediate bonuses at Goldman Sachs and the small, deferred bonuses at RBS and elsewhere

It is clear that some banks have deferred a lot of 2010 bonuses and some banks haven't.

As we suggested last week, Credit Suisse even appears to be deferring 70% of bonuses for first year associates. Meanwhile, headhunters allege that Goldman is paying 80% of its bonuses in cash, even for MDs.

How is this?

Code staff

The answer appears to be the categorisation of code staff.

Code staff, defined here, are those to whom the FSA's compensation rules

strictly apply.

The fewer code staff, the fewer people covered strictly by the rules. However, no one seems to know precisely what 'code staff' constitute.

"The guidance that's been provided by the FSA is relatively limited and therefore it's up to banks - in conjunction with the FSA - to come up with an appropriate definition of code staff," says Alastair Windass, a lawyer at Clifford Chance.

In the circumstances, it would appear that some banks are defining code staff differently to others. According to The Guardian, RBS is applying the definition a little more widely than anyone else. Hence, RBS has 300 of them, more than both HSBC (280) and BarCap (231).

US banks, such as Goldman, don't disclose the number of code staff they employ in London. However, it could be assumed that Goldman is interpreting the definition very narrowly - otherwise tales of MDs being paid 80% cash wouldn't be surfacing with quite such frequency.

When a very effective risk function means very small deferrals

Goldman doesn't comment about pay. But it's feasible that the bank has managed to negotiate down its number of code staff based on the strength of its risk function.

This is because code staff are categorised partly as persons likely to expose a firm to 'material risk.'

"If you have a very limited risk function, you might say there are more individuals who are able to expose the firm to material risk," suggests one financial services lawyer. "If you have a very strong and effective risk function, you might say the inverse."

The implication? The larger and more effective the risk function, the larger your cash bonus.