Lunchtime Links: Compensation at US banks would need to fall 60% to meet historical norms
JPMorgan's third quarter results have just emerged. As expected, they show compensation and headcount in the investment bank falling. Average comp per head was down 16% year-on-year in the first nine months and headcount was down 1,101 quarter-on-quarter. However, the average JPMorgan investment banker is on track to earn $386k this year, and based on historical norms this still looks excessive.
Financial News has an interesting chart showing the evolution of pay in the New York City securities industry vs. pay in other private sector roles in the city.
It shows that in 2010, the average securities professional in the city earned 5.8 times more than other private sector workers in the city. This ratio has risen fairly steadily since 1980 (although it sank bank slightly in 2009).
Back in the 1980s, however, the average NYC securities professional only earned around 2.5 times the average NYC private sector employee. If this ratio were reestablished, securities professionals today would clearly be in for substantial pay cut. Private sector NYC employees today are earning about $60k, suggesting average banking pay should be more like $150k (95k). This year's compensation cuts could be the start of a long downwards trend.
Profits at JPMorgan down 4%. (Dealbook)
Josef Ackermann does not like the European bank recapitalization plan. (Financial Times)
Dexia's enormous reliance on wholesale funding and big exposure to PIIGS make it a bit of a one off. (WSJ)
Fitch is thinking of slashing UK banks' ratings. (Sky)
Michael Geoghegan has carried out an extensive review of Ireland's National Asset Management Agency and thinks it needs fewer accountants and more property specialists and that they should be paid more. (The Times)
Barclays Wealth has hired two people for its strategic solutions group; one came from Merrill Lynch, one came from Citi. (Financial News)
Rob Nagel, a portfolio manager at Cadiz Asset Management, a South African investment firm, says African banks have not clamped down on bonuses to the extent seen in the UK and Europe. (Financial News)
Blackberry users at Credit Suisse have fallen by one third. (Reuters)
Effects of the Blackberry outage: staff members had to pay attention during meetings, without the usual e-mail distractions. (NY Times)
Iran's supreme leader said on Wednesday that a wave of protests spreading from Wall Street to cities across the US reflected a serious crisis that would ultimately topple capitalism in America. (Guardian)
Vikram "1 dollar/year" Pandit uniquely qualified to speak with Wall Street protestors. (Dealbreaker)
