Bank Of America To Cut Investment Banker Pay By 25 Percent: Report
First it was the layoff announcements. Now it's time for pay cuts.
A new type of structural adjustment continues to plague one of America's most iconic banks. Bank Of America officials reportedly told investment bankers to prepare for pay packages an average of 25 percent smaller than last year, Bloomberg reports. As average overall compensation for a BofA investment banking associate was $163,438 as of October, according to Glassdoor.com, that figure would seem likely to remain in six-figure territory.
The announcement comes one day after reports emerged that the company plans to cut costs by as much as $8 billion per year in neat future, according to a separate Bloomberg report. The bank, which recently surrendered the title of largest in the country, announced late last year that it would slash 30,000 jobs over the next few years to compensate for the bank's mortgage unit and new regulations, both of which have hurt BofA's bottom line.
The bank has had a rough few years, with company stock plunging 63 percent between 2010 and 2011. The bank also lost $14 billion last year from legal settlements tied to mortgages alone. That's not to say the bank isn't profitable. BofA netted $2 billion in profits during the last three months of 2011, reversing a loss from the same time in 2010.
But BofA employees aren't the only Wall Street workers that will have to face the consequences of an industry in transition. Wall Street firms as a whole will likely slash their compensation pools to the lowest levels since the financial crisis in 2008, according to the Wall Street Journal.
The sordid details of pay packages at some banks are already trickling out. Morgan Stanley announced earlier this month that it would cap all cash bonuses at $125,000, according to The New York Times.
One employee at Goldman Sachs told CNBC that the bank's bonus day last week was a "bloodbath," as some junior workers found out they wouldn't be taking home any bonus at all this year. In addition, the bank reportedly slashed the pay of some high-level employees by half, the WSJ reports.