Since then, fixed compensation has continued to soar while bonuses have been culled. According to Eximius, the recruiter, salaries for so-called “revenue generators” have climbed by 54 per cent in the last two years. Staff at vice-president level now command a basic salary of between £110,000 and £140,000 against £70,000 to £90,000 in 2009, it says.
Before the populist assault on bonuses began, banks would respond to tough times by slashing variable compensation, enabling them to keep valued staff while shielding the bottom line. And there is no doubt about it: these are tough times. At Goldman Sachs, fixed income revenues fell by 63 per cent between the first and second quarter; at Credit Suisse they tumbled 76 per cent; and JP Morgan saw them fall 18 per cent.
With salaries so high, banks have little option but to lay off staff, especially as many are eking out a return on equity in the single digits. The number of job cuts could run into the tens of thousands, which is bad news for the global economy. Because these people aren’t just revenue generators – they’re wealth generators too.