Lunchtime Links: How 2011 bonuses could yet turn out to be great
Forget all the stuff about bonuses being terrible this year, there is a way in which they could be redeemed.
Deferred stock.
What with the problems in the Eurozone, bank stocks are not looking very healthy. Yesterday, SocGen fell 15% and Morgan Stanley fell up to 12%.
Bank stocks could clearly fall further. Longer term, however, they could also recover. Dick Bove insists US bank stocks are currently very cheap given US banks' limited exposure to European debt. Goldman is now trading at 13% below its tangible book value; Mike Mayo thinks it could rise 30%. Nomura analyst Glenn Schorr thinks JPMorgan's share price could rise from $32.7 now to $47 in future.
Needless to say, this could all prove wishful thinking if the Eurozone breaks up and a systemic global banking crisis is unleashed. Alternatively, optimists like Bove think the ECB will bail European banks out as much as is necessary.
With luck, deferred bonuses for 2011 will be allocated when banks' stock prices are at historic lows. With further luck, the system will recover from any Eurozone related dislocations. With more luck, in three years' time the 2011 bonus round could look a lot better than it does right now.
RoE, is the wrong target. Over the last 10 to 15 years it has helped to make many bankers rich and loyal shareholders poor. (Bank of England)
Stephen Hester says that bonuses are not the font of all evil. (Telegraph)
Credit Suisse has shut down its New York CMBS group, with the loss of 50 jobs. (Financial News)
Stuart Gulliver (HSBC) and Peter Sands (Standard Chartered), think London is the perfect place for an offshore renminbi trading hub. So does City minister Mark Hoban. (Financial News)
Nomura added 8,000 jobs to its payroll when it bought bits of Lehman. (The Times)
Nomura is even making people redundant in Japan. (Bloomberg)
"It appears MF placed a large bet designed to give it the earnings power to build an investment bank quickly. Jefferies has been building its investment bank methodically for over 20 years and using our cash flow from existing core businesses to fund it." (Bloomberg)
Behind Jon Corzine's bearded, avuncular facade lies the soul of a stubborn, ambitious and aggressive risk-taking trader who in the end drove MF Global into the financial abyss. (Bloomberg)
Key Components of MF Global's Business Continuity Management Program. (Fintag)
How Jon Corzine has ruined it for bankers with beards. (Financial Times)
How Jon Corzine has ruined it for bankers in tank tops. (WSJ)
