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JPMorgan Cuts Investment Bank Pay Pool by 22% in Quarter

JPMorgan Chase & Co. bank branch in New York. Photographer: Robert Caplin/Bloomberg
JPMorgan Chase & Co. bank branch in New York. Photographer: Robert Caplin/Bloomberg

July 13 (Bloomberg) -- JPMorgan Chase & Co.’s investment bank cut the amount earmarked for compensation by 22 percent to $2.01 billion in the second quarter as the division generated 7 percent less revenue.

The unit set aside $4.91 billion for pay in the first six months of the year, enough to compensate each of the 26,553 employees an average of $184,989 for the period, according to a figures posted today on the New York-based company’s website. That’s down from the first half of 2011, when the firm set aside $211,358 for each of the unit’s 27,716 employees.

Pay at the world’s biggest lenders has drawn extra scrutiny since the 2008 credit crisis, with regulators and lawmakers saying compensation plans encouraged bankers to take too much risk. JPMorgan said today it intends to claw back two years of compensation from three employees in the firm’s chief investment office after a $5.8 billion trading loss. The lender accepted an offer from Ina Drew, 55, the former head of the CIO, to forfeit her pay for the same period.

The investment bank’s compensation costs equaled 33 percent of revenue excluding accounting gains for the second quarter, down from 36 percent a year earlier. The unit allocated $2.6 billion to pay traders, dealmakers and other personnel in the same period of 2011.

Net income for the investment bank, run by Jes Staley, 55, fell to $1.91 billion in the quarter from $2.06 billion the previous year. The unit generated 39 percent of JPMorgan’s $4.96 billion in profit, up from 38 percent in the same period last year.

The unit had 846 more people than at the end of the first quarter and 1,163 fewer than a year earlier, according to today’s disclosure. Companywide, the staff expanded to 262,882 as of June 30 from 261,453 at the end of the first quarter and 250,095 at the middle of 2011.

To contact the reporters on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net; 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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