Morning Coffee: Morgan Stanley juniors have been feeling underpaid, overworked and frustrated. Rush to staff-up in ECM

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Times are tough for junior-to-mid-ranking bankers in London and New York. Despite earning enough to be considered rich by most people’s standards, associates and vice presidents in investment banks - who earn anything from £70k to £120k per year in salary - are being squeezed by high living costs. Because they work long hours, they need to live near the office, but they aren’t paid a salary commensurate with high London house prices – especially if they want to move out of shared accommodation and start a family.

Morgan Stanley has decided to make amends. Bloomberg reports that James Gorman will be increasing salaries for Morgan Stanley’s associates and vice presidents by 25% so that they have more money to spend. Bonuses will be reduced accordingly. – This doesn’t amount to a net pay increase: it’s an attempt to help associates and VPs with their ‘cash-flow.’

Will other U.S. banks follow suite? Maybe not. As we’ve reportedly previously, Morgan Stanley’s bonus deferrals are among the most punitive of all U.S. banks. While rival U.S. houses pay a high proportion of junior bonuses in cash, Morgan Stanley defers 45% of bonuses up to $250k over a three year period. Its junior and mid-ranking bankers will therefore have felt the cash-pinch more than others.

It’s not just cash-flow issues that Gorman is seeking to address. Bloomberg says that Morgan Stanley has also introduced time management guidelines and hosted career management seminars for its junior and mid-ranking bankers. Reading between the lines, the package seems to suggest that Morgan Stanley’s staff have been feeling underpaid, overworked and frustrated in their jobs. Morgan Stanley deserves some credit for doing something about it.

Separately, banks responding to booming equity capital markets (ECM) by promoting staff. For the moment, it’s mostly about reshuffling at the top end, but this is usually symptomatic of hiring further down the pyramid. Bank of America has promoted Craig Coben, its former head of European ECM to become co-global head of the business. And JPMorgan has relocated Chris Roberts from San Francisco to lead equity capital markets execution in Europe. JPMorgan says it’s experiencing “increased deal flow’ in Europe.  We say that new recruits are likely soon.


Goldman denies all claims of sex bias, says its employees are prohibited from attending strip clubs and topless bars, produces a female managing director who says, “I do not feel excluded from social events, such as events with clients and informal get-togethers after work with co-workers, including golf events.” (Bloomberg)

Senior M&A bankers still want to join boutiques. Moelis just hired Philip Smith, who spent 17 years at Citigroup. (Bloomberg)

Profits at boutique M&A firm Greenhill just fell 48%, illustrating the downside of working for a smaller firm reliant on big deals to make money. A few of Greenhill’s deals have been delayed, hence the disastrous first half. (Bloomberg) 

Tensions in Gaza and the Ukraine are leading to volatility in FX markets. This could increase FX revenues, but it will probably be too late to save FX jobs and bonuses. (Bloomberg)

Andrea Orcel, chief executive of UBS, says "Commercial banking is similar to Wal-Mart but investment banks should be more like Louis Vuitton.” Orcel says the two businesses shouldn’t be too closely combined, which will come as good news to UBS’s investment bankers. (Euromoney) 

As investment banking revenues in Asia fail to live up to expectations, commercial banking is the thing. Citi is hiring 100 commercial bankers on the continent, They will work with clients who have $10m to $500m in sales and will offer them ‘additional services such as FX and cash management.’ (Economic Times)

Women who want to do well are advised to develop their own relationships, rather than to stick to the clients handed down to them (by a man). (OUP Blog)

"A lot of my friends from Oxford are unemployed - not because they want to be, because finding employment is hard." Don’t’ assume that your top university is a ticket to a job. (Telegraph)

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