JPMorgan Chase & Co on Friday announced a record US$9.3 billion payday for its investment banking employees, setting the stage for competitors like Goldman Sachs Group Inc to also make eye-popping payouts.
On a per employee basis, JPMorgan investment bankers, sales staff and traders, on average, are set to make about US$379,000 for last year, up more than US$100,000 from 2008, when the broader financial sector was mired in crisis.
“People looking at it from the outside look at the dollars and say they are high,” said Kenneth Raskin, the head of law firm White & Case’s executive compensation practice. “There is no question the dollars are high. The question is whether they were deserving.”
Median US household income in 2008 was US$50,303.
Michael Cavanagh, JPMorgan’s chief financial officer, told reporters that even though pay is up overall, its investment bank still reduced the percentage of revenue that it set aside for pay, to 33 percent, from 62 percent for 2008 and historical averages of about 44 percent. Its investment bank had one of its strongest years.
Analysts also expect Goldman Sachs Group Inc and Morgan Stanley, which report their results next week, to show an upswing in pay. Citigroup Inc, however, could pay commercial and investment banking bonuses for last year that are similar to 2008 levels, sources said.
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