There’s a rumor going round Wall Street to the impact that Morgan Stanley has additionally increased pay for its bankers. Vice presidents at Morgan Stanley in New York are stated to be receiving $295k in base salaries, up from what seems to have been a ceiling of $250k beforehand. However, the alleged wage rise does not appear to have hit VPs in London, and Morgan Stanley hasn’t confirmed it. If it is occurred, it is very new – as a result of there is no signal of upper spending on pay within the financial institution’s newly launched results for the second quarter.
Instead, Morgan Stanley’s Q2 results present the financial institution spending 18% much less on compensation in its institutional securities unit (its funding financial institution) within the three months to June than one year beforehand. This follows a 17% fall in pre-tax earnings at the unit over the identical interval.
The excellent news is that Morgan Stanley’s spending on pay for its bankers and merchants was nonetheless up by 16% on 2020 for the primary half of this year as a entire. However, there are one other six months to go earlier than the year-end and if the second quarter development continues, pay might but find yourself down. – Especially for anybody working in Morgan Stanley’s fastened revenue currencies and commodities division, the place revenues have been plummeting following the abnormally good situations final year.
The charts beneath present the comparative income progress at Morgan Stanley and different banks by enterprise line in each the second quarter and the primary half (hover for the precise numbers). Compared to rivals, Morgan Stanley hasn’t finished badly. But it hasn’t finished nicely both: it is distinctly center of the street, besides in fairness capital markets the place it is extra particular.
If Morgan Stanley bankers and merchants are questioning about their compensation as we speak, they’re most likely not the one ones. JPMorgan’s compensation spending in its company and funding financial institution adopted a comparable sample: it too fell within the second quarter, however is nonetheless up (by 13%) in the entire of the primary six months. Citi indicated yesterday that bonus accruals in its funding financial institution had been down the second quarter too.
Bank of America does not cut up out spending on compensation, making it harder to decipher exactly what’s occurring with its pay (though BofA may have to extend bonuses this year following complaints that final year’s had been unimpressive). The solely financial institution, subsequently, that seems to have definitively elevated compensation throughout the primary half of 2021 is Goldman Sachs, which splurged a large 47% more on employees within the first half versus the identical interval of 2020.
Goldman, too, has time to make amends for this generosity: it is fairly attainable that bonus accruals on the agency will fall between now and December. This appears notably attainable if Goldman benchmarks its compensation spending to its rivals: at most banks, 2021 does not appear like a bumper year for pay.