Did your firm increase base pay in the last couple years? Then you and/or the guy/girl to your right might be getting laid off.

Back in 2009, when out-of-sight Wall Street bonuses became public enemy No. 1, bankers dealt with the problem in their own ingenious way: They significantly raised salaries and deferred bonus payouts. Those moves helped defuse (or, at least, confuse) the mob, but now they’re coming back to bite the banks. That’s because the salary increases have left the banks with elevated fixed costs at a time of stagnant revenues. The situation, J.P. Morgan Chase & Co. analyst Kian Abouhossein pointed out in a report Tuesday, is a formula for “material staff cuts.”

The cuts could be most severe at Credit Suisse and UBS, which appear to have the highest fixed compensation costs. At Credit Suisse, 81% of compensation costs are fixed, Mr. Abouhossein said, and at UBS the figure is 63%. That’s a big change from just two years ago, when 63% of Credit Suisse’s compensation costs were fixed and 55% at UBS…Morgan Stanley also could be in a “tight spot” and require restructuring, particularly in its fixed-income trading division, Mr. Abouhossein wrote. Morgan Stanley has invested heavily in trading over the past couple of years, installing new management and hiring some 400 sales and trading staffers to recapture business lost to bigger banks. It typically takes time for this sort of recruiting effort to pay off, and it certainly doesn’t seem to have yet for Morgan Stanley, which generated only half as much trading revenue last year as industry leaders like Deutsche Bank or Goldman Sachs.

[Crain’s via BI]

22 comments (hidden to protect delicate sensibilities)
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Comments (22)

  1. Posted by NAKED_long | June 15, 2011 at 7:05 PM

    It’s a zero sum game, baby! In order to double pay for MD’s you have to kick out 10 dudes from back office.

  2. Posted by Guest | June 15, 2011 at 7:12 PM

    The JP Morgan analyst said: “I predict material staff cuts at all of the big investment banks…  Oh wait, crap.”

  3. Posted by Guest | June 15, 2011 at 7:17 PM

    Fuck, I just bought a new suit.

    –UBS fixed income trader

  4. Posted by NAKED_long | June 15, 2011 at 7:21 PM

    You can use it to prostitute yourself. Isn’t it what you were doing anyway?

  5. Posted by Guest | June 15, 2011 at 7:25 PM



  6. Posted by strategery | June 15, 2011 at 7:28 PM

    Firing each of their CEOs with no severance package would be a good start in reducing fixed costs.

    – Guy who’s just sayin’

  7. Posted by NAKED_long | June 15, 2011 at 7:34 PM

    Nice picture kiddo, now get the fuck out of my bank.

  8. Posted by Guest | June 15, 2011 at 7:41 PM

    No worries, you will need it for your next job as a waiter/valet/bartender, no wait scratch that. You need a personality to bartend.

    Former Synthetic CDO squared structurer at AIG

    Former Bartender

    Former Waiter

    Former Busboy

    Senior Strategic Executive Director of Washroom Service

  9. Posted by Judge Smails | June 15, 2011 at 7:44 PM

    Well, the world needs ditch diggers too.

  10. Posted by Guest | June 15, 2011 at 7:54 PM


  11. Posted by Guest | June 15, 2011 at 7:55 PM

    Sorry, I didn’t mean to ding your Civic on the way out. I did mean to take your hubcap

  12. Posted by Guest | June 15, 2011 at 7:56 PM

    Relax. Right now it’s technically just Layoffs Watch warning.

  13. Posted by Dick Fuld | June 15, 2011 at 8:03 PM

    Your’s isn’t bent like mine?

  14. Posted by Guest | June 15, 2011 at 8:08 PM

    Say’s the guy named “naked long” might as well be puff banker wanker.

  15. Posted by Guest | June 15, 2011 at 8:15 PM

    Not since designing the ditch-digger 5100.

    – Current CAT/Former John Deere Project Engineer.

  16. Posted by Guest | June 15, 2011 at 8:37 PM

    at UBS 63% of compensation costs are fixed.  The other 37% simply don’t exist

  17. Posted by Guest | June 15, 2011 at 8:48 PM

    Love the pitchfork inflow every time a google news alert goes off for “banker layoffs” on Macbooks in Starbucks across the country (and in the UK too, judging by the above). 

  18. Posted by Guest | June 15, 2011 at 9:46 PM

    Is that like a tornado warning?  cause pretty used to that out here-

    -East Texas Natty “Trader”

  19. Posted by Guest | June 15, 2011 at 11:03 PM

    just extend the date at which you pay employees by 7 years, then it’s not a “technical layoff”

    -Wolfgang Schaeuble 

  20. Posted by Guest | June 16, 2011 at 12:42 AM


  21. Posted by Bear | June 16, 2011 at 1:56 AM

    Dont layoff people at MS — just move them to work on legacy system in middle/back office! That’s more painful and fair! 

  22. Posted by Ryan1997msco | June 17, 2011 at 3:40 AM

    Dude, Morgan Stanley sucks….let em all go…worthless…..