How about brilliant financial reports? Big banks on Wall Street still need to cut salaries and lay off workers

category:Finance
 How about brilliant financial reports? Big banks on Wall Street still need to cut salaries and lay off workers


Traders, analysts and bankers contributed a lot to bank profits because of the surge in market trading volume, debt and equity underwriting. But they may be disappointed that the bonus doesnt match the contribution. Because, when the global economy falls into a double dip recession, the worlds largest lending banks will increase loan loss reserves.

Bank of America, JPMorgan Chase and Citigroup, the biggest lending banks in the United States, have given their employees a clear message: bankers should be lucky to be hired and paid handsomely after 2020. Although traders made huge profits at the risk of infection in the early days of the global outbreak of the new coronavirus and in the last two months, the big banks made it clear that the bonuses might not match the profits they made.

Executives at JP Morgan and Citigroup told the media that they tried to manage employees psychological expectations of 2020 bonuses by emphasizing that banks had prepared for the possible default rate caused by the new crown outbreak that hit the global economy.

Bonuses are a huge problem were trying to solve, says one investment bank executive, as the Bank tries to balance results based pay with good citizen obligations. Indeed, regulators and policymakers have begun to limit spending on bank shareholders to cushion potential loan losses.

Investment bank bonus has always been a very delicate social topic. On the one hand, senior officials should balance the expectations of traders and bankers with the cost control requirements of investors, and on the other hand, they should also calm down the publics hatred for the high remuneration of banks.

Its just that the bonus allocation challenge for investment banks this year is even bigger. Alan Johnson, founder of Johnson & Associates, a compensation consultancy, commented: this is the first time that there has been a dramatic difference in the revenue gap between different sectors of the bank since the 2008 financial crisis. This year, this difference is most obvious in the retail, consulting and trading business of banks. Citigroup, JPMorgan Chase and Bank of America wrote off $48 billion in loan losses in the first nine months of this year, three times that of the same period last year.

But, according to Alan Johnson, the picture is different between investment banks. Employees in the investment banking departments of Morgan Stanley and Goldman Sachs are likely to receive more bonuses because of their smaller exposure to loans related to the outbreak of the new crown disease, with loan losses totalling only $35 billion this year.

Insiders at Citigroup and Bank of America insist that their bonuses should keep pace with industry performance. For example, if a departments profits have increased by 50%, employees in that department can expect a 25% increase in bonus. Not only Wall Street, but European investment banks are facing a similar situation. Investment banks, including Barclays, Deutsche Bank and France Hing Bank, are all trying to revive their ailing businesses, trying to stabilize shareholders confidence in the era of negative interest rates, and senior officials believe that lowering bonuses is a foregone conclusion. Even though banks are generally tough this year, its still a good year for analysts and traders, at least they can expect more bonuses than other businesses, with more colleagues in their departments. According to Johnson & Associates, there is a big bonus gap between international investment banks this year, with some retail divisions likely to cut their bonuses by 30% or more. Source: Wind Information Editor: Yang Bin_ NF4368

Insiders at Citigroup and Bank of America insist that their bonuses should keep pace with industry performance. For example, if a departments profits have increased by 50%, employees in that department can expect a 25% increase in bonus.

Not only Wall Street, but European investment banks are facing a similar situation. Investment banks, including Barclays, Deutsche Bank and France Hing Bank, are all trying to revive their ailing businesses, trying to stabilize shareholders confidence in the era of negative interest rates, and senior officials believe that lowering bonuses is a foregone conclusion.

Even though banks are generally tough this year, its still a good year for analysts and traders, at least they can expect more bonuses than other businesses, with more colleagues in their departments. According to Johnson & Associates, there is a big bonus gap between international investment banks this year, with some retail divisions likely to cut their bonuses by 30% or more.