Investment firm Goldman Sachs reports 51% gender pay gap

US-based investment firm Goldman Sachs has reported a gender pay gap of nearly 51% as part of new legislation that forces all businesses to disclose their gender pay statistics.

The bank paid women 50.8% less than men for each hour they worked at the business in 2018 worldwide, which is around 5% lower than its reported gap in 2017. however, the UK branch of the Investment bank reported a gender pay gap of only 17.9%.

The report also highlighted an average financial bonus pay gap of 66.7% for Goldman Sachs International, with an average financial bonus gap of 40.7% for Goldman Sachs UK branch.

However, it was also found that both Goldman Sachs International and the UK branch of the firm give bonuses to a higher proportion of women at the firm than men, and at the lowest salary groupings, women earned on average more than their male co-worker counterparts.

The report was calculated on statistics based on the average salaries of men and women paid at the firm in the UK, irrespective of role, seniority or performance.

The bank has stated that this doesn’t reflect a lack of commitment to the Equal Pay Act, but is instead indicative of a longstanding issue within Investment banking, that men are more likely than women to gain senior roles and work bonuses.

The highest salary grouping for the firm, which commonly constituted the most senior levels of management, found a pay gap of over 63.8% for the International group, and 55.2% for the UK branch.

Similar reports have been found in other banks, such as the Bank of England, which reported an average pay-gap of 21% and reported that their highest paid employees were 70% male, compared to the lowest paid who were 57% female.

Goldman Sachs have also released an outline for how the investment firm plan to deal with the pay gap and the issue of diversity within the business.

The firm has committed to expanding the diversity in the upper management of the bank, including new policies for childcare and eldercare, as well as new healthcare plans for fertility and gender dysphoria.

The firm also aims to gain a 50% female-male quota when hiring analysts from University and from other companies, along with proportional hiring quotas for ethnicity.

Government makes £2bn loss on sale of RBS shares

Overnight the government has sold 925m shares in the majority public owned RBS for £2.5bn. The sale represents a £2.1bn loss at the rate of 271p, compared to 500p a decade ago, which has not been traded above since 2010.

The National Audit Office (NAO) states that the true break-even price is 625p. This itself has never hit this since 2008, and could lead to an overall total loss of over £30bn.

The government still owns 7.5 billion shares, and this latest sale covers 7% of the ownership of the bank. The first batch of shares to be sold after Alistair Darling and Gordon Brown had to intervene in 2008 was in 2015 for 330p raising £1.9bn. After this latest round, taxpayers’ stake in the bank has lowered from 70.1% to 62.4%.

Ostensibly, this loss needs to be measured over what the catastrophic scenario would have been without the bailout out in the first place which cannot be denied when the banking world of a decade ago is judged. RBS was arguably the biggest bank in the world at the time and the Labour government originally was forced to step in to save a crisis, not to attempt to make a profit. Over the past decade the bank has been restructured, and now operates more as a domestic bank, for example RBS now operates in nine countries as opposed to thirty-eight. However, such vast scale restructuring has led to the bank shrinking in size by more than half, leading to between 50,000-60,000 job losses.

Despite these damaging figures, both the government and RBS appear satisfied with the mornings conclusions. Jon Glen, Treasury Economic Secretary argued that it is “unrealistic” to think Britain should hold on to RBS shares until taxpayers can recoup their investment, and Chancellor Phillip Hammond sees the sale as helping to put the “financial crisis behind us”. Hammond also argued that the government should not be in the business of owning banks, and that the proceeds of this sale will go towards reducing the national debt and help to “build an economy that is fit for the future.”

But this it is virtually impossible for the public to feel self-assured in these comments. Especially after the worries amongst financiers earlier in the year that there was potentially another crash on the way, looking at America particularly, which do not seem to let up following President Trump’s latest protectionist trade policies.

Amongst the Chief Executive of RBS Ross McEwan’s pleasure at the largest stakeholder selling more of its share, he is under the impression that RBS is now a simpler, safer bank that is focussed on delivering for its customers and its shareholders. Indeed so, in February the bank reported an annual profit of £752m, this was its first for a decade and a sharp turnaround from the £6.95bn loss the previous year.

Yet on the Today programme this morning, Ian Gordon, a Banking Analyst at Investec, not only reiterated the gloomy news for the public that there is no chance of ever breaking even on its investment, but RBS have further plans to downsize to hit a cost-income ratio target of 50%. This will add to the £40bn already spent by RBS on conduct and restructuring cost, which has not only consumed the £45 billion bailout fee, but together with bad debts has destroyed the value of the business, and could lead to more job losses. Gordon concluded that because of this, RBS is still an inefficient bank and the most optimistic and aggressive target, should all the markets act favourably, would be 2023 for selling off all remaining shares.

Frustratingly, Jane Sydenham, an Investment Director at Rathbone, sees the present as a good time for the government to sell these shares because the economy is “reasonably strong” due to low interest rates which are slowly rising. This may be good for the banks, but similarly was thought over ten years ago, and, looking at the uncertainty in America and the rise of populism across Europe, it remains difficult for faith to be placed in the current economic system going forward.

Despite positive sounds coming from the world of finance, not only is it clear that the public will not be refunded directly, judging from the mixed reception it is still clear that everything is very unclear. At the turn of the year there was talk of another crash. And comments from Sydenham about the economy growing and interest rates being low mean nothing to people whose wages cannot compete with inflation.

Analysis from Iwan Doherty- Editor in Chief

Privatised profits and nationalised losses. When the Labour Party rail against policies for ‘the few’ this is what they mean. RBS has been making losses at the expense of the taxpayer for the last decade, but as soon as it posts a profit it is boxed up to be sold. The policy is corrupt and will only enrich a few people and will hit our pockets.

The chancellor says we cannot hold onto our shares. Nonsense. George Osbourne promised that the Treasury would make a profit on bailing out the banks. We are set to make a £25bn loss. This from the party of fiscal responsibility.

The loss is a spectacular failure by the Tories and another reminder of how the rich and powerful use their influence to tip the tables in society. It is another reminder of the Global Financial Crisis when the economic establishment made us pay up for their mistakes.