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How Goldman Sachs compares with JPM, Citi and BofA

Weighing up the big American investment banks

If you're interested in Goldman Sachs careers, you should also be interested in how Goldman Sachs is performing compared to its closest rivals. Now that Goldman's reported its full year results for 2014, along with J.P. Morgan, Citi and BofA, we can see just how shiny it is really. The answer?

1. Goldman Sachs is hiring. J.P. Morgan is not 

Goldman Sachs has been hiking its headcount. In the past year, it's added 1,100 people, with 500 people joining since September. Goldman Sachs now employs more people globally than at any time since the third quarter of 2011. In 2014, it hired more people than in any year since 2010 (when it hired more than 2,600). Goldman Sachs is....expanding.

By comparison, J.P. Morgan's corporate and investment bank seems to be shrinking. Last year, it diminished by 1,121 people. Because J.P. Morgan groups its corporate bankers and its investment bankers in the same category, we don't know whether it's J.P.'s investment bankers or their corporate banking colleagues who've been leaving. Neither Citi nor BofA provide figures for investment banking headcount.

Goldman Sachs' accumulation of people may not be as exciting as it seems. Whenever the firm talks about adding headcount today, it's in the context of low cost centres like Salt Lake City and Mumbai - which aren't quite the same as working on Wall Street or the City of London.

Conclusion: You might be able to get a job at Goldman Sachs! But it may not be as exciting as you'd anticipated.

2. Goldman Sachs is ever so slightly cutting pay, just like J.P. Morgan

Goldman Sachs is cutting pay. And so is J.P. Morgan.

In 2014, Goldman Sachs cut average pay per head across the firm by 1.2% to $379k. J.P. Morgan cut pay per head in its corporate and investment bank by 1.4% to $207k.

Goldman Sachs looks a lot more generous than J.P. Morgan. However, it's worth remembering (again) that J.P.'s headcount figures include a lot of 'cheap' corporate bankers who bring down the average. No one knows how much BofA and Citi pay per head as they release figures for neither pay nor headcount in their investment banks.

[efc_twitter text="If you work for Goldman, this year's pay figures look at bit depressing. In 2010, the firm paid an average of $430k"] per head.

Conclusion: Goldman still pays a lot. But it pays a lot less than before.

3. Goldman's fixed income traders had an unfortunate end to the year compared to rivals at J.P., but they did better than traders at BofA and Citi 

In the fourth quarter of 2014, when accounting adjustments and a one-time gain in 2013 are omitted, revenues in Goldman Sachs' fixed income sales and trading business fell by...31%.

That's huge. At J.P. Morgan, fixed income revenues fell 23% in the fourth quarter.

Goldman's fixed income traders can at least console themselves with the thought that they out-performed rivals at BofA (a fourth quarter decline of 35%) and matched Citi (a fourth quarter decline of 31%).

Goldman's fourth quarter problems nonetheless corresponded to those of BofA. Both banks complained of troubles in credit and mortgage trading, but did comparatively well in currencies and rates.

Conclusion: Goldman's fixed income traders should not be hopeful about their bonuses.

4. Goldman's equity traders had a terrible year compared to... everyone

Equities sales and trading revenues rose by 1% last year at J.P. Morgan. At Citigroup, they fell by 1%. At BofA they fell by 2%.

At Goldman Sachs, full year 2014 equities revenues fell by 5%. Within that 'equities client execution revenues' fell by a massive 20%. This was only redeemed by a 10% increase in revenues at Goldman's 'securities services' (prime broking) business.

Conclusion: Goldman's equities traders will not get paid. Goldman's prime brokers should (get paid), but may not due to divisional poor performance.

5. Goldman's M&A bankers were on fire, even compared to the hotness at J.P. Morgan

Revenues in Goldman's advisory business rose by 25% last year! This compared to an increase of 24% at J.P. Morgan and mere 7% and 11% increases respectively at BofA and Citi.

Conclusion: Goldman's M&A bankers will want a large proportion of the bonus pool.

6. Goldman's return on equity is just about rising and its senior staff will get paid. (J.P. Morgan's is falling in the CIB) 

If Lloyd Blankfein et al want to get paid at Goldman Sachs, they need to achieve a 10% annualized return on equity. Fortunately they've done that - just. In 2014, RoE at Goldman was 11.2%, up from 11% in 2013.

At J.P. Morgan's corporate and investment bank, the return on equity was 10% in 2014. This was down from 15% a year earlier.

Conclusion: Goldman's executive committee will never let RoE at the bank fall below 10%.

7. There's less risk-taking going on at Goldman Sachs, but it's worse over at J.P. Morgan 

Risk-taking traders at J.P. Morgan have been hobbled. As we reported earlier this week, Value at Risk (VaR) at JPMorgan's investment bank was cut by 19% in 2014. At Goldman Sachs it was trimmed a mere 10%. Goldman's FX and rates traders even got a freer rein in 2014 (VaR up 12%).

Conclusion: Goldman's risk team has been cracking the whip - but not that hard.




AUTHORSarah Butcher Global Editor

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