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US Fin inst to pay $144 bn in compensation and benefits in 2010

12 Oct, 2010, 02.54PM IST,PTI

… Wall Street, with the estimated 2010 profit of $61.3 billion is expected
to pay $144 billion to employees …

NEW DELHI: About three dozen of the top US financial institutions are set to
pay a record USD 144-billion in compensation and benefits this year, a 4 per
cent increase from last year.

According to an analysis by The Wall Street Journal, the 35 securities and


investment-services firms which include banks, investment banks, hedge
funds, money-management firms and securities exchanges, are expected to
pay USD 144 billion in compensation and benefits this year, compared with
USD 139 billion paid out in 2009.

Compensation was expected to rise at 26 of the 35 firms, while revenue may


rise at 29 of the 35 firms surveyed, but at a slower pace than pay, according
to the Journal.

The companies revenue is expected to rise 3 per cent to USD 448 billion from
USD 433 billion, despite a slowdown in some high-profile activities like stock
and bond trading, it added.

Overall, Wall Street is expected to pay 32.1 per cent of its revenue to
employees, the same as last year, but below the 36 per cent in 2007.

Profits, which were depressed by losses in the past two years, have bounced
back from the 2008 crisis.

The report noted that the estimated 2010 profit of USD 61.3 billion for the
firms surveyed still falls about 20 per cent short from the record USD 82
billion in 2006. Over that same period, compensation across the firms in the
survey increased 23 per cent.

Interestingly, the report said that higher revenue does not always mean
higher compensation like at Citigroup Inc , which remains about 12 per cent-
owned by the government, analysts projected revenue would increase this
year by about 4 per cent.

But pay for the banking giant is likely to be down about 8 per cent, according
to Journal survey.

The opposite is true at Goldman Sachs Group Inc and Bank of America
2
Corp , where analysts project revenue will be down, but compensation will be
up, the report noted.

Goldman's revenue is expected to decline by 13.5 per cent this year to USD
39.1 billion, from USD 45.2 billion in 2009.

Compensation remains projected higher than last year, up 3.7 per cent to
USD 16.8 billion, from USD 16.2 billion in 2009, according to the Journal
survey.

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to-pay-144-bn-in-compensation-benefits-in-2010/articleshow/6735388.cms