Bankers' pay is taking up a bigger share of bank earnings, even as the number of investment bankers not taking home a bonus has shot up.
Staff costs made up 81 percent of a pot including employee pay costs and profits at 13 big banks last year, compared with 58 percent before the financial crisis, according to data compiled by the Financial Times. At the same time, the share of investment bankers not taking home a bonus more than doubled from 2010 to 2011, according to Options Group data cited by Bloomberg.
The two seemingly contradictory trends may both be the result of a sluggish economy. Banks often pay their employees a higher proportion of their revenue during economic downturns, according to CNNMoney, and in the wake of the financial crisis did increase base salaries -- that part of an employee's salary not coming from bonuses and benefits -- Options Group Managing Director Michael Karp told Bloomberg.
Yet as financial institutions face scrutiny from regulators and pressure from Europe's volatile economy, many are cutting back on bonuses. Such cutbacks created a bonus-day environment at Goldman Sachs that one employee described as a "bloodbath." Morgan Stanley also cut back on its bonuses, capping the cash payments at $125,000 earlier this year.
For some banks, the downturn may mean that they go as far as slashing staff completely. Indeed, bankers are preparing for another round of job cuts as their employers face the reality that they aren't bringing in enough money to keep staff at current levels.
There are some in the finance industry who are doing just fine. Pay for top Wall Street CEOs rose an average of 20 percent last year, but not everyone is happy about it. Citigroup CEO Vikram Pandit was sued in April over his outsized pay after shareholders struck down his pay package.