BofA, Credit Suisse The Latest Banks To Reduce Banker Bonuses
As Wall Street adjusts to a less profitable chapter in its history, bankers may be finally feeling the pain that many American workers have known for some time.
Slow global economic growth and a boost in regulations are among the reasons banks raked in lower profits last year. As a result, institutions ranging from Bank of America and Credit Suisse to Goldman Sachs gave lower bonuses to employees for 2011. In addition, some firms cut the size of compensation to lower levels than at any point since the 2008 financial crisis.
BofA, which informed employees of their bonuses on Thursday, has decided to freeze base salary levels and limit cash bonuses to $150,000 for some bankers, Bloomberg reports. Employees who are netting as much as $1 million in total bonuses will receive limited cash, with the rest of their bonuses being diverted into BofA shares.
Credit Suisse, a major Swiss bank, also told senior bankers that their total compensation would be 30 percent lower on average than in 2010, according to a separate Bloomberg report.
These recent moves mirror pay cuts across the banking industry. Bonus day at Goldman Sachs was "a bloodbath," one mid-level employee told CNBC. The investment bank set aside 21 percent less money for compensation and benefits than in the previous year.
Many Citigroup employees received bonuses that were smaller than is typical, or even nonexistent for 2011, according to The New York Times. JPMorgan Chase set aside 9 percent less money in compensation for its investment banking unit, the Wall Street Journal reports.
In addition, Morgan Stanley capped 2011 cash bonuses at $125,000 and didn't give cash bonuses to its top executives, according to The New York Times.
But some Wall Street workers had more pressing issues to contend with last year than simply a cut in pay. Many bankers already have been forced to leave their jobs, with Wall Street laying off more than 200,000 bankers in 2011 alone.
Some banks continue to cut back. Vikram Pandit, chief executive of Citigroup, said in an interview with Bloomberg Television that he plans to slash Citigroup's expenses by $2.5 to $3 billion in 2012. Citigroup already is laying off 5,000 employees, according to Bloomberg News.