Bankers at Goldman Sachs are on track for average pay packets of more than $770,000 (£475,000) this year after the investment bank astonished Wall Street and the City with barnstorming results yesterday.

Only days after Alistair Darling, the Chancellor, warned that very high City bonuses helped bankers to make reckless decisions that led to the credit crisis, big bonuses are back. Goldman, which employs 5,500 people in London, reported a spectacular recovery in profits to $3.4 billion in the three months to June and earmarked $6.65 billion for pay and bonuses.

This was almost 50 per cent more than in the near-equivalent quarter last year and sets the scene for record payouts at the end of the year if the bank can maintain such profits .

Analysts said the bank was on track to beat 2007, its best year for compensation, when the average employee’s share of the pay pool was $661,490. Million-dollar payouts were commonplace and the senior figures received $10 million or more. News of the record profits caused a storm in the US where Goldman’s rivals are struggling to shore up their battered balance sheets. It is only nine months since the firm was bailed out with a $10 billion loan from the US Government. The money was repaid last month.

American banks have come in for heavy criticism over the multimillion-dollar bonuses they have paid to star bankers and President Barack Obama plans to clamp down on what he considers excessive executive pay in the financial sector.

Vince Cable, the Liberal Democrat Treasury spokesman, expressed serious unease at the return of huge bonuses. “It really does seem to be a case of business as usual,” he said. “Executives at Goldman Sachs clearly have short memories. In the space of ten months, they’ve gone from taking a begging bowl to the US Government to paying out massive bonuses.”

Sir David Walker, who was appointed by the Government to set out how bank pay structures and boardroom rules might be reformed to make bankers less reckless, publishes his interim findings tomorrow.

Investment banks are making huge amounts of money from advising companies and governments which need to raise large amounts in the bond and share markets because of the credit crunch. Competition has shrunk because of the failure of some rivals, such as Lehman Brothers, and the shrinking ambitions of others, leaving the survivors able to fatten margins.

Although Goldman is likely to prove the most exceptional moneymaker this year, other securities houses in London, including J P Morgan Cazenove, Morgan Stanley and Barclays Capital, are also expected to report bumper profits and pay large bonuses.

David Viniar, Goldman Sachs’s chief financial officer, acknowledged that the bank would be criticised. “We know it. We see it. We don’t like it. We believe we are doing good things,” he said. “We have a pay-for-performance culture. As you saw in 08, if we don’t perform well, compensation goes down, and if we do, we reward people appropriately.” Mr Vinair said that in the past three months the bank had earned almost $13.8 billion in revenue, the most in its 140-year history.

Goldman Sachs’s London operations have raked in hundreds of millions of fees from helping struggling British and European companies to raise billions of pounds from investors to reduce their debts. They played a part in advising the Treasury on the nationalisation of Northern Rock.

The bank’s London-based stars can expect big bonuses if the good times continue, with Mike Sherwood, who jointly runs Goldman Sachs’s operations alongside Richard Gnodde, well placed for record payments. Goldman Sachs has been excoriated in the US press, most recently in an article in Rolling Stone that described it as a “great vampire squid wrapped around the face of humanity” for its ability to profit even in disastrous times.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax