Junior bankers should brace for a possible pay freeze, Bloomberg reports. All eyes are on Goldman Sachs and JPMorgan Chase, as Credit Suisse has suspended its practice of automatically bumping up pay for its IB analysts, associates and vice presidents. The Swiss bank will continue to boost salaries annually, while lowering bonuses, so net comps are flat year-over-year. Wall Street is watching the biggest banks to see if they will follow suit, the story reports, adding:
"Cutting pay can be perilous if your rivals don’t because it’s easier for junior bankers to defect, draining a future generation of talent. Wall Street firms may make the change en masse only if one or more of their biggest rivals act first."
Bankers typically start with a $200,000 salary and see a 15 to 20 percent pay increase for the first few years. Since new hires out of business school tend to talk with each other about their packages, pay for lower-level bankers tends to be more transparent and “aligned with peers at competing firms” when compared with more senior positions. “Word of lower entry-level pay at one bank can hinder recruiting at top business schools, which is why the biggest banks rarely consider such pay freezes,” Bloomberg explained.
BofA is cutting 15 of its 75 managing directors in its Asia investment bank unit. [NY Times]
RBS to cut as many as 5,000 IB jobs, with details to be announced Thursday. [Bloomberg]
The total value of mergers and acquisitions deals in Britain last year fell to the lowest level on record. [Financial Times]
Lloyds will sell its Middle East operations. [Financial Times]
Wells Fargo, China Development Bank and the Sumitomo Mitsui Financial Group of Japan are in a three-way race to acquire RBS Aviation Capital. [DealBook]
Raymond James emerged as the front-runner in the bidding for Morgan Keegan. [Reuters]
Current and former Credit Suisse bankers have spent $450 million to buy assets like mortgage-backed securities from the firm. [Businessweek]
Deutche, Goldman among big financial firms seeding hedge funds. [DealBook]
Nearly 60 percent of hedge funds logged a loss for 2011. [Hedge Fund Intelligence]
ING merged its cash-equity business with related products to increase sales, cut costs and improve risk management. [Bloomberg]
American Funds plans to launch eight funds this spring. [Investment News]
Andrew Ross Sorkin: Are bonuses cut enough? [DealBook]