Pay cuts likely to signal a ‘new normal’ on Street
Goldman Sachs Group, which is known for handing out some of the most lucrative pay packages on Wall Street, paid just 37% of its 2012 adjusted revenue to employees — the second-lowest proportion since the Wall Street firm went public in 1999.
Earlier this week, sources said Barclays and Deutsche Bank plan to cut banker pay by up to 20%, while Morgan Stanley took the unusual step of deferring 100% of 2012 bonuses for high-earning employees. Morgan Stanley bankers and traders got word directly from their managers on Thursday, which one employee characterised as “bonus day, if you can even call it that anymore”.
Wall Street employees might have to get used to that. Investors and analysts believe lower compensation is here to stay for some time as firms face unprecedented challenges, in some cases forcing them to fundamentally rethink how they operate. New regulations make many businesses on Wall Street less profitable and sometimes even impossible.
With tens of thousands of jobs shed in the past few years, bankers and traders have trouble demanding more money. Banks are also replacing employees with automated systems in areas such as bond
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