9 firms likely to shrink total compensation in 2013

Honey I Shrunk The Banks

'Bonuses this year are going to be really tough'.

The Financial Times has undertaken an analysis of the quarterly reports of 9 of the largest investment banks in the US and Europe, and has revealed that the firms have set aside a combined $51.4bn in overall pay in the first nine months, 5% cent less than in the same period the year before. Profits increased by a 10th over the same period.

The data also suggest a growing gap between European banks and their US rivals, which are set to reduce pay by a more moderate amount. In Europe, Royal Bank of Scotland set aside 27% less for investment bank pay in the first three quarters of the year, while Credit Suisse, Deutsche Bank, UBS, HSBC and Barclays set aside between 5% and 17% cent less.

In the US, however, Goldman Sachs set aside 5% less, while JPMorgan and Morgan Stanley set aside 4% and 3% cent less respectively.

'Bonuses this year are going to be really tough', a senior investment banker says.

Pay experts and investors say the cuts underline how bank boards are still seeking to shift resources from employees to shareholders in the wake of last year’s revolts over pay.

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