Wednesday’s Headlines: Wall St. Bonuses Get Dinged While Bank Profits Plunge

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Not enough money

Wall Streeters might be whining about lousy comps this year, but they don’t reflect the much sorrier state of affairs of their employers. DealBook has a report by Thomas DiNapoli showing payouts to New York finance industry employees are expected to drop only 14 percent during this bonus season, while the profits of financial institutions employing them plummeted by 51 percent -- the second consecutive year that Wall Street saw its profit chopped by more than half. Nonetheless, these firms continued to pay out about $20 billion in cash comps each year. Bonuses averaged $121,150, down from just $191,360 in 2006.

“But the comptroller’s estimates, which do not include non-cash compensation, may not give the full picture of this year’s bonus season,” the blog wrote. “Increasingly, banks are doling out a larger portion of their annual payouts in shares, as a way to link pay to long-term performance … At the same time, overall compensation on Wall Street remains high relative to the rest of New York.” In 2010, average Wall Street comps were 5.5 times higher than the average private sector employee at $361,180. DealBook explained: “The issue has proved a lightning rod for politicians and critics who contend that the industry’s pay packages are too high. But some banks defend their practices, arguing that compensation is critical to retaining and rewarding employees.”

 

Other News:

Banks’ lending increase reached a four-year high. [WSJ]

J.P. Morgan said new lender regulation renders 70 percent of customers with less than $100,000 in assets unprofitable. [Investment News]

Goldman Sachs employees in Japan joined a union. [NY Times]

A Goldman fund and the European buyout firm Cinven will sell the Nordic manufacturing supplier Ahlsell to CVC for $2.4 billion. [DealBook]

Goldman traders had losses on 17 days in the fourth quarter, down from 21 days in the prior period. [Businessweek]

A judge nixed BB&T’s proposed purchase of BankAtlantic Bancorp’s lending business. [Reuters]

Bank of Georgia lists on the London Stock Exchange. [Financial Times]

Fidelity launches a new thought leadership microsite aimed at delivering provocative investment ideas. [Investment News]

ID theft tops U.S. bank consumers’ complaints. [CNN Money]

Slideshow: 10 most complained-about UK financial firms. [The Telegraph]

 

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