Bonuses cut at JP Morgan as deals dry up: Investment bankers facing cuts of up to 30%
Investment bankers at JPMorgan are facing bonus cuts of up to 30 per cent after a slump in deal making took a chunk out of earnings on Wall Street.
Firms have been battening down the hatches as recession looms, depriving top New York banks of lucrative fee income.
JPMorgan was among those counting the cost yesterday as it revealed a 57 per cent fall in investment banking revenues in the fourth quarter to £1.1billion.
Sign of the times: Investment bankers at JPMorgan are facing bonus cuts of up to 30 per cent after a slump in deal making took a chunk out of earnings on Wall Street
It was a similar story at Citigroup, which saw a 58 per cent fall while Bank of America’s investment banking fees also more than halved.
Jamie Dimon, JPMorgan’s chief executive, said: ‘Global investment banking fees were down significantly in a challenging environment.’
The figures come amid speculation that high-earning bankers in London and New York are facing a gloomy start to the year with job cuts and lower bonuses on the way – after a bumper period a year earlier as economies reopened from lockdowns. Goldman Sachs, which reports its results next week, has already begun a cull of 3,200 roles.
Some of the setback suffered by investment bankers was offset by the performance of other parts of Wall Street firms’ operations.
Profit margins on lending have been boosted by the US Federal Reserve’s aggressive path of interest rate hikes. At JPMorgan, overall profits were up 6 per cent to £9billion, boosted by an upbeat performance from its trading revenue.
It was a mixed bag elsewhere with Bank of America up 2 per cent but Citi down 21 per cent and Wells Fargo off 50 per cent as it faced fines for settling scandals from recent years. The banks also set aside a combined £3.3billion in anticipation of loans turning sour amid the downturn, led by a £1.1billion provision from JPMorgan.
Blackrock chief Larry Fink said markets are ‘unlike anything we’ve seen in decades’ after the value of assets managed by the fund manager dropped by £1.2trillion last year.
The boss of the world’s biggest investment firm said ‘negative markets had a substantial impact’ on its performance. The New York-based group said the value of its assets fell by 14 per cent in 2022, from £8.2trillion to £7trillion. In the last three months of the year revenue fell 15 per cent to £3.5billion.
Blackrock said this week it would cut 500 jobs after a year in which US stocks had their biggest fall since 2008.