Saturday, May 21, 2016

Hard times on Wall Street as pay cuts, layoffs loom

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Wall Street Pay – Trending Low


Latest report from compensation consultant Johnson Associates indicates that Wall Street pay tends to be trending lower this year as frail first quarter earnings, strong business environment and regulatory restraints will cause in slashes in almost all the trade’s lines of business. Managing director of Johnson Associates, Alan Johnson stated that this is the first time since the financial crisis that they have seen everyone trend down. The report is established on the results from the first three months of the year and hence the viewpoint could alter, according to Johnson.

But he did note that is a psychological change amidst the clients of his firm.Financial companies believe that the environment could be harder ahead; marked by more opposition, low interest rates for extended and extra regulation. Johnson has stated that there seems to be a lengthy list of things and that their clients have put them together saying that it is just going to become harder. According to report, in the financial industry, incentive pay will drop between 5% and 20% this year and the exemption to it will be in retail as well as commercial banking where the pay would be flat to around 5%.

Year Ahead Fair Amount of More Job Cuts


Johnson had mentioned that this area moves more with the cost of living and that the sector has been performing well. On the other hand, pay in investment bank would weaken between 10% and 20% though compensation in sales and trading is said to drop 5% to 20%, as per report and it is not only investment bankers perceived in taking a pay cut, since hedge fund compensation is projected to decline by 5 – 15%.

The pay for asset managers is seen off at 5% to 10% owing to weak inflows together with lower to flat appreciation in assets under the category of management. Together with pay being cut, payrolls would also be trimmed according to Johnson. He further added that it is quieter than in the past, though it seems to occur as one speaks. This year and ahead there will be a fair amount of more job cuts.

Global Mergers/Acquisitions – Volume Plunge 20%


Most of the financial companies are persistently reducing head count in places inclusive of London and New York since the cities tend to be too expensive, deciding to cut on jobs or move the workers to lower-cost centres. According to financial services data firm Dealogic, global investment banking businesses seemed to suffer the slowest first quarter since 2009.

The almost$750 billion in global mergers as well as acquisitions signified a volume plunge of 20% year over year, as per Dealogic report recently. The analysts stated that banking revenue was affected by a combination of slow start to the years’ M&A, weak high-yield debt issuance together with lingering weakness in the trading operations of banks. Making matter worse was the trading desk revenue which had been shrinking at several top banks.

Morgan Stanley had revealed plans of reducing head count in its fixed income, currency as well as commodities trading operation as a measure of a broader plan of streamlining operations and generating savings. But the stock of the bank had recovered from early February lows, and the shares are yet down by about 20% on the year. No comments have been provided by representatives of Morgan Stanley.

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