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How investment bankers are quietly making a fortune, bank by bank

Something nice is happening to investment bankers – at last. Scorned on the dating circuit, trapped in unfulfilling jobs, left to think deep thoughts alone in their cubicles, they can finally console themselves with the happy thought that their pay is rising – significantly.

How can this be happening? Simple: banks’ share prices are on a tear. Over the past 12 months, the S&P Financials index has risen 40%. If you’re an investment banker at a U.S. bank with a lot of your deferred bonus locked up in stock, you’re sitting on a much larger sum than you were eight months ago.

Many fortunate bankers now find themselves in this situation following regulators’ insistence that banks cut cash bonuses and pay more stock. This year, for example, Morgan Stanley, decided to defer 100% of all bonuses paid to bankers earning more than $350k. Since then, Morgan Stanley’s share price has risen by around 23%.

Needless to say, not all bankers are enjoying the fortuitous effects of a healthy share price: Barclays’ stock is down 10% this year; RBS’s is down 5%. While bankers at British firms look on in envy, these bankers are cashing in (or at least will be once their stock vests, and if share prices hold out).

UBS: Stock up 27% ytd.

Citigroup: Stock up 26% ytd.

Bank of America: Stock up 25% ytd.

J.P. Morgan: Stock up 25% ytd.

Goldman Sachs: Stock up 24% ytd.

Morgan Stanley: Stock up 23% ytd.

Credit Suisse: Stock up 21% ytd.

 

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