Wall Street to Cut Bonuses in 2012

According to the New York State Comptroller, Wall Street is set to reduce cash bonuses for the second year in a row. In a similar vein, the securities industry could lose another 10,000 jobs by the end of 2012, bringing the total cuts for New York in the sector to 32,000 since January 2008.

Wall Street will cut bonuses next year as revenue drops amid a sluggish U.S. economic recovery, the European debt crisis and new compensation structures to curb risk taking, New York State Comptroller Thomas DiNapoli said.

According to the New York State Comptroller, Wall Street is set to reduce cash bonuses for the second year in a row. In a similar vein, the securities industry could lose another 10,000 jobs by the end of 2012, bringing the total cuts for New York in the sector to 32,000 since January 2008.

Wall Street will cut bonuses next year as revenue drops amid a sluggish U.S. economic recovery, the European debt crisis and new compensation structures to curb risk taking, New York State Comptroller Thomas DiNapoli said.

Bonuses are “certainly going to be lower,” DiNapoli said in a Bloomberg Television interview. Banks will have less money to pay awards, and “you’re seeing an increase in base salary pay, and more in terms of bonuses and incentives that are paid out over time,” he said.

The securities industry, one of the biggest employers in New York State, could also lose another 10,000 jobs by the end of 2012, according to the report.

The job losses would bring the total layoffs on Wall Street since January 2008 to 32,000, according to Comptroller Thomas DiNapoli’s office, a contraction of about 17 percent. The industry shrank closer to 20 percent in the early 1990s and the early 2000s.

[quote]The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year, Mr. DiNapoli said in a statement. It now seems likely that profits will fall sharply, job losses will continue and bonuses will be smaller than last year. [/quote]

Despite job cuts and lagging profits at their firms, Wall Street employees who remain employed are doing well. The average salary of a worker in the industry in New York jumped to $361,330 in 2010, a 16 percent increase over the average last year, according to the report. That is more than five times the average private sector salary in New York, which stands at $66,120.

Cash bonuses, which can account for a large portion of a financial employee’s annual income, are expected to fall in 2011, though the comptroller’s report did not predict the amount of the decline. In 2010, cash bonuses totaled an estimated $20.8 billion.

The outlook for the industry may be grim, but many employees are optimistic about their compensation, according to a separate survey on Monday.

Recruiting website eFinancialCareers said 62 percent of Wall Street employees think their 2011 bonuses will be the same or better than last year.

“People on Wall Street in general don’t have small egos,” said Malcolm Polley, chief investment officer at Stewart Capital Advisors, in a report by Reuters. Polley added that people on Wall Street are always surprised when they lose their jobs, or their bonuses decline.

Via The Securities Industry in New York City