JPMorgan is pounding the table against large-scale bank reform in a research report this morning. But its latest report doesn't emphasize possible impacts on headcount as an earlier report from the same institution did.
The new report by a team led by Nick O'Donohue, the bank's head of research, warns that if all steps proposed by regulators are implemented, industry-wide average return on equity would collapse 60 percent (from 13.3 percent to 5.4 percent) and banks might respond by boosting prices they charge consumers by as much as 33 percent.
"The cumulative impact of all the proposed regulation suggests that there is a real risk that we may move from a system that was under regulated to one that is over regulated," JPM says, according to Reuters. It says that could cause "a significant increase in lending costs and a negative impact on the economy."
In a report last summer, JPMorgan estimated costs of various regulatory proposals and then projected specific headcount reduction and pay reductions various banks would have to make to offset those added costs. That report was issued by one of the firm's banking sector analysts, who presumably falls below O'Donohue in the research hierarchy. Reuters' summary of the latest JPM report does not mention cost cuts, but does cite potential price increases.
Bank Reform May Have $220 Bln Capital Hit [Reuters, via NY Times]
Bank Hiring: The Sector Breakdown [Financial News]
HighTower Snatches Longtime Morgan Stanley Team [Investment News]
Investor Ire To Drive Fund of Hedge Fund Shake-Up [Reuters]
BNP Posts Fourth Straight Quarterly Profit on Fortis [Bloomberg News]
BNP Paribas allotted 28 percent of IB revenue for compensation (before UK and French bonus taxes), versus 40 percent in prior years. Its board hasn't set the 2009 incentive pay amounts for CEO Michel Pebereau and other top executives, but traders' cash bonuses total about 500 million euros.
When Getting the Job Is the Easy Part [WSJ]