Wall Street Pay to Drop as Hiring Strains Revenue, Schorr Says: Tom Keene

Pay for people in bonds, currencies and commodities is likely to decline this year as firms increased hiring after a strong 2009, and regulators focused on large bonuses as those markets remained “sluggish,” according to Glenn Schorr, an analyst of brokerage stocks at Nomura Securities International Inc. in New York.

“The more revenues are down, the tougher it will be on compensation,” Schorr said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “We just draw the correlation between revenues and compensation: they’re inevitably tied on Wall Street and this year is no different.”

Revenue has declined between about 20 percent and 25 percent for Wall Street investment banks after “a really good 2009,” Schorr said. Subsequent hiring boosted costs since salaries and bonuses make up about 70 percent of expenses at these companies, he said.

“We have the unfortunate situation of revenues down and head count up,” Schorr said. “It makes it a difficult year to manage the expense line.”

The Standard & Poor’s 500 Index has climbed about 12 percent this year, after gaining 23 percent in 2009. U.S. government debt is up 5.67 percent since last December, compared with a loss of 3.72 percent the prior year, according to Bank of America Merrill Lynch index data.

To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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