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Week in review: Bonuses and redundancies

Spent all last week in an isolation tank? Here’s what you missed in terms of big stories in the world of pay, hiring and firing.

Morgan Stanley made more redundancies. The US bank is closing its US mortgage origination business and slashing a UK mortgage unit according to Reuters. Financial News reported that MS has also cut 75% of staff in its structured products group.

UBS did not have a good week. After announcing the most monumental fourth quarter loss in living memory (according to Bloomberg), unearthing some unexpected additional writedowns, and indicating some additional redundancies, its share price fell nearly 15%, and may decline still further following warnings (also on Bloomberg) that $18.3bn of writedowns may yet be to come. Despite this, we calculated that bonuses at the bank fell a mere 9%.

Credit Suisse had a much happier time of it, revealing that it actually increased its profits last year.

Morgan McKinley came up with some research suggesting that bonuses were generally up. We suspect this refers to the back and middle office.

Japan got up close and personal with the credit crunch. The Financial Times reported that Merrill Lynch, Citigroup and Credit Suisse all cut jobs there. Bloomberg reported that Morgan Stanley added to its roster of cuts with the eradication of 40 securitization roles in Tokyo.

Jerome Kerviel spoke out through the pages of Paris Match and said he’d been making big losses as long ago as June, according to Reuters, and is thinking of building a new career in IT.

Warren Buffet came up with a plan to bolster the municipal bond business of the monolines to the tune of $5bn. The only problem, according to just about everyone (including the Economist), is that Buffet’s plan would do nothing to shore up the more toxic subprime products the monolines have also shacked up with.

According to the Financial Times, Eliot Spitzer has therefore given the monolines three to five business days in which to separate their business into nice (municipal bonds) and nasty (subprime related stuff). There are no direct implications for jobs, except that if the monolines are downgraded, which seems inevitable following a split, banks will be left facing further writedowns. And that could be painful…

Comments (3)

Comments
  1. What was the story like at Barclays Capital? As much as most of us do not even consider it a proper investment bank, none talks about them. I have heard horrific stories

  2. Barcap not a proper IB… what are you talking about. Barcap almost certainly the best European IB, and globally second only to perhaps two US houses. From what i hear, not so much of a disaster. Few took large cuts from 07.

  3. Barcap is a mediocre bank emplying mediocre people. It needs a savage clear out.

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