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Monday’s Headlines: Wall Street bonuses down, stock fortunes possibly up

We’ve reported it before: bankers should expect dismal bonuses this year – with average cuts projected at about 30 percent over 2010. The bright side is that financial firms will likely compensate employees instead with packages of depressed stock – which could balloon to fortunes in the future, DealBook reports. The article quotes a corporate law and finance professor at Yale: “This year is the perfect situation where they can say it is a modest bonus season, but in the end, it could end up making many of them zillionaires. Not all banks may do well in the long run, but most will.”

Since the financial crisis, banks have been pushed by the government to hand out larger swaths of restricted stock and options, which allow an employee to buy shares down the road at a certain price. By linking personal compensation to long-term company performance, the hope is to curb the excessive risk-taking that brought the financial system to the brink a few years ago. While a bank’s stock could continue to languish amid the economic malaise and regulatory uncertainty, the odds are in the bankers’ favor. Following periods of prolonged weakness, financial companies typically experience a large price spike the next year. After the recession ended in 2003, the Keefe, Bruyette & Woods index of bank stocks rose more than 40 percent.

Other News:

Breaking news: white men make the most on Wall Street. [NY Times]

Business is booming for London procurement specialists, with bonuses of 100 percent of pay. [Reuters]

Hong Kong beats New York as the top city for raising IPO funds. [WSJ]

Finra issues sanctions against eight broker-dealers and 10 people related to private placements. [Investment News]

South Korea’s Hana Financial Group’s $3.5 billion purchase of the controlling stake in Korea Exchange Bank will close by year’s end. [Reuters]

Citi discusses a shuffle of its managers in Asia in an attempt to reassure Japanese regulators. [Bloomberg]

Memphis struggles to keep Morgan Keegan’s 1,050-employee headquarters as the Regions Financial unit is to be purchased for $1 billion by Stifel Financial. [Nashville Business Journal]

A brief history of rogue trading. [Financial Times]

AUTHOREmma Johnson Insider Comment

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