Thursday Headlines: J.P. Morgan slashes IB comps even though revenue is up over last year
J.P. Morgan's investment bank cut employee compensation by 3 percent to an average of $289,611 per worker for the first nine months of the year, even as the division generated 10 percent more revenue over the year-ago period, according to The Wall Street Journal.
The investment banking staff counted 26,615 people at the end of the third quarter - 1,101 fewer than at the end of the second quarter. Companywide the number of employees expanded 3 percent to 256,663.
The news came as The New York Times reported that the bank's third quarter profits fell by 4 percent on dropped revenue, which fell 11 percent to $24.4 billion, "amid a slowdown in stock and debt offerings that had propped up the bank's results in previous quarters. Difficult trading conditions, slimmer profit margins on lending, and the elimination of overdraft and other penalty fees also weighed on top-line growth."
The home lending division continued to "bleed money," and contributed to billions of dollars in legal fees associated with the mortgage crisis. JPMorgan Chase's credit card services, asset management and commercial banking units posted profits.
The bank's quarterly earnings are seen as a barometer of the financial services industry, as other Wall Street banks will release their reports over the next week.
Most hedge funds will escape the new tougher federal oversight which targets those with more than $50 billion in assets. [Financial Times]
MetLife may seek a buyer for its mortgage operation. [Bloomberg]
Those convicted of insider trading are facing harsher sentences than in the past. [WSJ]
The EU's effort to recapitalize banks means the region's bankers will forego bonuses and shareholders will give up dividends. [Businessweek]
An escalation in Europe's debt crisis may trigger a selloff in Asian assets. [Bloomberg]
Goldman Sachs and Morgan Stanley may consider dropping their status as bank holding companies to avoid expenses tied to the Volcker rule. [Businessweek]
A Sydney-based hedge fund founded by three former Goldman Sachs traders closed shop. [Businessweek]
Credit hedge fund Stone Tower Capital has opened a new office in Ireland. [Hedge Fund Net]
Hedge fund manager Brian Kelly, a regular on the CNBC show Fast Money, has launched a new global macro fund, Shelter Harbor Capital, with $2.4 million and 10 investors. [Hedge Fund Net]
Hedge fund manager Man Group has launched a long/short equity fund. [Hedge Fund Net]
Focus Financial bought LVW Advisors of Pittsford, N.Y.-a pickup that signals the wind-down of Convergent Wealth Advisors' institutional unit. [Investment News]