INVESTMENT bank Goldman Sachs posted huge forecast-shattering 2009 profits overnight as the banking giant moved to deflect criticism about lavish bonuses from $US16 billion ($17.8 billion) reserved for compensation.
Goldman Sachs, the poster child for public outrage over big bonuses, said it was scaling its money for employee compensation in the face of criticism that it weathered the financial crisis with government aid.
The bank reported net profit of $US4.787 billion in the fourth quarter. For all of 2009, net profit leapt to $US12.192 billion, a sixfold increase from $US2.041 billion in 2008.
"I think the people of Goldman Sachs did a great job this year," finance chief David Viniar told reporters.
Goldman Sachs said it had alloted $US16.193 billion in 2009 for compensation, including bonuses and benefits, a rise of 48 per cent from a year earlier.
Chairman and chief executive Lloyd Blankfein said the year's pay and benefits outlay was "our lowest-ever compensation to net revenues ratio"-at 35.8 per cent, down from 48.0 per cent a year earlier.
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The Wall Street giant said that fourth-quarter compensation had been reduced to fund a charitable contribution of $US500 million to one of the firm's philanthropy programs aimed at stimulating US economic growth and job creation.
On average, each of the bank's 32,500 employees would have received nearly $US500,000 dollars in compensation and benefits in 2009.
Mr Viniar, who said that the majority of the reductions would affect top executives, insisted: "We're not blind to the calls for restraint and we heard them."
Goldman Sachs, one of the most successful survivors of the financial crisis, had announced in December it would pay bonuses to top executives in stock instead of cash.
In the 2008 fourth quarter, at the height of the financial crisis, Goldman Sachs had posted its first loss and received 10 billion dollars in government aid that it has since repaid.
Shares in Goldman Sachs plunged 4.12 percent to close at $US161.16 in New York as the market posted triple-digit losses after President Barack Obama announced a plan to curb the size and scope of the biggest US banks.
"Never again will the American taxpayer be held hostage by a bank that is too big to fail," Obama said, vowing to enact the reforms in Congress despite lobbyists' opposition.
The President blamed banks for sparking the worst economic crisis since the Great Depression with "huge reckless risks in pursuit of quick profits and massive bonuses" in a "binge of irresponsibility."
Mr Viniar declined to comment on the announcement but added: "Trying to regulate by pure size is a very dangerous thing to do."
Mr Blankfein said the bank performed well throughout the year, "particularly during the most difficult conditions."
"Despite significant headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liequidity to markets and by investing for our clients," he said.
The quarterly profit compared with a year-earlier loss of $US2.287 billion amid the financial sector meltdown following the Lehman Brothers collapse. That year 2008 ended on November 28 in the bank's previous reporting calendar.
Asked about a report that the firm will slash bonuses for London staff because of a new British tax on the payments, Viniar said: "For the moment nothing is 100 per cent."
Late last year, the British Government slapped a 50 per cent tax rate on bank employee bonuses above 25,000 pounds $45,000) in an attempt to recoup cash spent rescuing the financial sector.
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