City defends high bonus expectations
WALL Street banks are on track to pay employees a record $140bn (£88bn) this year, and despite predictions of a public backlash,City figures say that bonuses are well-deserved.
Bankers’ bonuses look set for a resurgence, after US bank JP Morgan Chase smashed analyst expectations to report third-quarter earnings of $3.59bn (£2.5bn), a 72 per cent year-on-year rise. It said it had put aside $7.3bn in the period to pay staff.
The bank is on track to pay out $29bn for the year, with investment bankers – many in the UK – set to receive around £280,000 each.
With JP Morgan’s US and European peers set to report over the next few weeks, Liberal Democrat MP Vince Cable predicted public “revulsion” at the size of bonuses, while Labour MP John Spellar said there would be “outrage”. But City figures defended the bonuses, saying they were within the rules and necessary to keep London internationally competitive.
“While some may be critical of the fact that the industry is looking so much better, that banks are in profit again is a good thing for the UK economy,” said British Bankers Association chief executive Angela Knight.
“And the bonuses are linked with the new bonus agreement, including deferrals, so people do not get the money if they do not perform.”
Andrew Evans, managing director of recruiter Morgan McKinley’s financial services unit, said that bonuses are essential to attract and retain “the highest calibre of talent”.
He added: “By no means do optimistic bonus expectations suggest the City is back to pre-credit crunch levels, but they do suggest the situation is improving.”