JP Morgan Chase is set to defy calls for restraint and pay out record bonuses this week thanks to bumper investment banking profits.
The US investment firm is expected to pay compensation of $29bn (£18bn) to its executives when it kicks off the annual banking results season on Friday. The pay-out is expected to be up 28 per cent from last year, according to analysts, partly due to a 50,000 increase in staff after the firm acquired Bear Stearns and Washington Mutual. JP Morgan’s 220,861 employees are on track to earn an average $131,300 for the year, against $100,000 in 2008, although its top investment bankers will pocket far more.
Analysts reckon the world’s biggest banks will pay more than $65bn to their staff over the next fortnight, in defiance of efforts by the US and UK governments to rein in bonuses. Jamie Dimon, JP Morgan’s chairman and chief executive, has personally complained to chancellor Alistair Darling over the new one-off 50 per cent tax on bonuses. The tax is also thought to have prompted the bank to reconsider plans to build a European headquarters in London.
Most banks in the City have said they would absorb all or part of the cost of Britain’s supertax, rather than cut back on remuneration.
JP Morgan received $25bn of government money under the Troubled Assets Relief Program last year, which it has paid back. The bank is forecast to report earnings per share growth of 62 per cent in the fourth quarter of 2009, equivalent to profits of $2.7bn.
City A.M. Reporter