Big banks' pay on course to top $200bn
JP Morgan Chase added a further $7.3bn (€4.9bn) to its compensation and bonus expenses in the third quarter as it opened the earnings season for US banks, bringing its year-to-date figure to $21.8bn. The quarterly sum adds to the $130bn in compensation expenses paid out or set aside by the biggest banks operating in Europe and the US during the first half of the year and leaves them on track to top the $200bn mark for the full year, according to research conducted by Financial News.
Group compensation expenses at JP Morgan Chase rose by a quarter from $5.9bn in the third quarter last year, leaving the figure for the first nine months this year 23% higher than the same period in 2008. At the group's investment bank, compensation expenses rose 28% from a year ago to $2.8bn in the third quarter, leaving the compensation bill for the first nine months more than a third higher than last year.
Compensation rose despite a drop of 20%, or roughly 6,000 in staff numbers at the investment bank from a year ago, as net revenues surged 85%, helping lower the ratio of compensation expenses to revenues from 53% a year ago to 37% in the third quarter this year.
The combined first-half figure of $130bn is what 20 of the largest banks in Europe and US, including JP Morgan Chase, set aside for compensation and benefits over the first two quarters.
According to the latest available figures, Bank of America Merrill Lynch had awarded the most in compensation paid and bonuses set aside in the first half, with $16.6bn going towards what the bank refers to as personnel - non-interest expense in its report.
US investment bank Lazard has awarded the least, with $400m paid out or set aside to what is referred to as compensation and benefits. The Europe-based bank that has paid and set aside the most is HSBC with an 'employee compensation and benefits' figure of $9.2bn.
BNP Paribas and Natixis did not provide figures for staff costs separate from their operating expenses, and for this reason the banks' figures are not included in the $130bn calculation. However, staff compensation often makes up upwards of 50% of operating costs.
Here is the list of the top US and European banks and how much they had paid or set aside to the end of June for compensation and benefits. The figures include JP Morgan's third-quarter figures and will be updated to reflect subsequent banks' results.
Barclays: $7.6bn - referred to as staff costs BNP Paribas: $16.5bn - referred to as operating expenses, and not included in the total Bank of America Merrill Lynch: $16.6bn - referred to as personnel - non-interest expense Crédit Agricole (Calyon): $5bn - referred to as personnel costs Citigroup: $12.6bn - referred to as compensation and benefits Commerzbank: $3.5bn - referred to as personnel expenses Credit Suisse: $8.4bn - referred to as compensation and benefits Deutsche Bank: $9.06bn - referred to as compensation and benefits Goldman Sachs: $11.4bn - referred to as compensation and benefits HSBC: $9.2bn - referred to as employee compensation and benefits JP Morgan: $21.8bn - referred to as compensation expense Lazard: $0.4bn - referred to as compensation and benefits Lloyds Banking Group: $4.8bn - referred to as staff administrative expenses in the report Morgan Stanley: $5.9bn - referred to as compensation and benefits Natixis: $3.2bn - referred to as expenses, and not included in the total Nomura: $2.06bn - referred to as compensation and benefits RBS: $7.3bn - referred to as staff costs Société Générale: $6.9bn - referred to as personnel expenses UBS: $8.3bn - referred to as personnel expenses Unicredit: $6.7bn - referred to as payroll costs
Total: $137.5bn
-- Write to lwillington@efinancialnews.com
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