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Morgan Stanley Boosts Investment Bank Pay Pool 10% in Half Year

Morgan Stanley Rises Most in Two Years on Trading Gains
The Morgan Stanley logo is displayed at company headquarters in New York on July 21, 2011. Photographer: Scott Eells/Bloomberg

July 21 (Bloomberg) -- Morgan Stanley, the sixth-largest U.S. bank by assets, set aside $4.19 billion in the first six months of the year to pay investment bank employee salaries, bonuses and benefits, up 10 percent from a year earlier.

Pay at the institutional-securities unit, which employs traders and bankers, was 48 percent of revenue, up from 39 percent in the first half of 2010, according to the New York-based company’s website. The unit’s revenue fell 11 percent to $8.78 billion during the period. For the company as a whole, compensation and benefits totaled $9.01 billion, up 9 percent.

Morgan Stanley set aside more money for employees even as Wall Street firms look to rein in costs amid declining revenue. Chief Financial Officer Ruth Porat said last month that the firm planned a three-year program to cut annual expenses by more than $1 billion. Goldman Sachs Group Inc. said this week that it will cut about 1,000 jobs in an effort to chop $1.2 billion of costs.

Companywide compensation, the firm’s largest expense, was enough to pay each of its 62,964 employees $143,066 for the six months, up from $133,994 for each of the 61,958 employees at the end of the second quarter of 2010, according to figures released today. The bank doesn’t report how many people work in institutional securities.

Morgan Stanley’s brokerage division, which employed 17,638 financial advisers at the end of June compared with 18,087 a year earlier, set aside $4.28 billion for pay in the first half, up 9 percent from a year earlier. The unit’s compensation cost, which is set by a fixed grid for many employees, was 62 percent of the division’s revenue, down from 64 percent last year.

Goldman Sachs

Goldman Sachs set aside $8.44 billion for its compensation pool in the first six months of 2011, 9 percent less than in the same period a year earlier as revenue tumbled 11 percent. The expense was enough pay each employee $237,662 for the six-month period, down from $272,581 a year earlier.

JPMorgan Chase & Co. set aside $5.86 billion in the first half to compensate employees at its investment bank, or an average $211,358 per person, up 4.8 percent from a year earlier. Both New York-based banks’ figures excluded charges tied to a U.K. bonus tax last year.

Wall Street firms typically reserve a portion of revenue throughout the year for employees, awarding most of the money as year-end bonuses. Average pay per worker doesn’t reflect the amount of money employees actually receive. Top executives and revenue producers sometimes receive multimillion-dollar awards, while clerical workers get smaller salaries.

To contact the reporters on this story: Michael J. Moore in New York at mmoore55@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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