If you work in banking - whether at Goldman Sachs or not - you may be aware that this is the week of Sanford Bernstein's 'Strategic Decisions Conference.' You may also be aware that Gary Cohn, chief operating officer of Goldman Sachs is making a presentation at Bernstein's conference today.
You can see the full presentation here.
However, if you're working in banking there are only two things from Cohn's slides that really matter. We've added them below.
Cohn said Goldman's 'global peers' cut 80,000 jobs in 2011 and 2012. That's a lot of people chasing a shrinking pool of jobs.
Return on equity (ROE) is negatively correlated with compensation as a proportion of revenues. Ergo as banks try increasing roe, compensation as a proportion of revenues must fall. Therefore, as banking revenues fall, so will banking pay. Goldman is effectively saying that bankers need to be paid less.