When Goldman Sachs Group Inc. employees cash their year-end checks, they'll have enough money to buy Bear Stearns Cos.
Goldman, the biggest and most profitable U.S. securities firm, set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of 2007, according to the company's third-quarter earnings report. The stock market values Bear Stearns Cos., the fifth-biggest firm, at $14.7 billion.
The figures demonstrate how the fortunes of U.S. investment banks have diverged this year during the collapse of the subprime mortgage market and a credit-market contraction. Analysts estimate that Bear Stearns's earnings will drop 27 percent. Goldman's shares have added 12 percent this year while Bear Stearns's are down 37 percent.
"This has been a year of winners and losers on Wall Street and there will be incredible variance on bonuses from bank to bank," said Michael Karp, chief executive officer of Options Group, a recruiting firm based in New York. "The fact that Goldman Sachs can pay its employees more than Bear's market cap speaks to this disparity."