Based on performance in Q4, here's who deserves to get paid for 2010 and who doesn't
Analysts at Nomura have produced 'clean' revenue figures by business area for Q4 2010 at each of the banks to have reported so far.
Comparing Q4 2010 with Q4 2009, they show which businesses at which banks grew their revenues faster than the rest of the market, and which businesses didn't.
Given short memories and the fact that bonuses tend to be disproportionately influenced by recent performance, here's who should be arguing for an increase.
The deserving:
1) JP Morgan's FICC salespeople and traders
On average, clean (ie. minus changes in the value of own debt) revenues in fixed income currencies and commodities at US banks were down 24% year on year in the fourth quarter. At JPMorgan they were up 6%. Admittedly, this may have something to do with the acquisition of Sempra's global metals and oil business in July, but it still looks good.
2) Morgan Stanley's equity salespeople and traders
Morgan Stanley did badly in FICC last year, but well in equity sales and trading. Comparing Q4 last year with Q4 2009, US banks achieved an average 4% increase in equity sales and trading revenues, but Morgan Stanley achieved a 19% increase. Someone at Morgan Stanley deserves to get paid.
3) Morgan Stanley's investment bankers
Morgan Stanley's investment bankers also outperformed the market (fourth quarter on fourth quarter). Revenues in M&A and advisory rose 2%; at the average US bank they declined 6%.
The undeserving
1) Goldman Sachs' FICC sales people traders
Goldman's FICC people do not deserve to collect big bonuses for 2010.
They presided over a 48% reduction in Q4 revenues, while across the market as a whole revenues fell 24%.
2) Bank of America's equity salespeople and traders
BAML's equities people also had a bad year. Equity sales and trading revenues at the bank were down 17% (Q4 2010 v Q4 2009); across the market as a whole they were up 4%.
3) Citi's investment bankers
Finally, Citi's M&A and advisory bankers had an unproductive final quarter. Their revenues shrunk 20%, versus a market average decline of 6%.
