Who said bonus caps were a Euro problem? At the behest of regulators, U.S. financial services firms have begun to rein in performance-based pay for executives, establishing lower ceilings on maximum annual awards.
Seven firms – PNC Financial, Capital One, Discover, BB&T Corp., KeyCorp, U.S. Bancorp and SunTrust Banks – scaled back maximum awards for top performers in 2012, from 200% of target bonuses to anywhere between 125% and 150%, according to The Wall Street Journal, citing research from Compensation Advisory Partners. Several firms acknowledged in regulatory filings that they curbed bonus ceilings to appease the Federal Reserve.
Unlike European regulators, who appeared to establish bonus caps to placate angry shareholders and citizens, the Fed is more interested in limiting risk, according to the report. Without caps, bankers are practically encouraged to take substantial short-term risks, goes the thinking.
Of the 23 banks included in the study, only one – Morgan Stanley – increased the maximum performance payout in 2012, reversing course from several years ago when it lowered its bonus ceiling abruptly. Larger firms like Goldman Sachs, Bank of America and Wells Fargo kept their 2012 bonus ceiling in line with the previous year, capping awards at 125% or 150% of target bonuses.
Give credit to U.S. regulators. They’re achieving progress without going on speaking tours and imposing legislation.
Here are some tips on how to nail down an investment banking job, directly from an MBA recruiter at J.P. Morgan.
The bankruptcy trustee has sued former MF Global Chief Executive Jon Corzine and other top brass for their “grossly negligent” actions leading to the firm’s demise.
HSBC will cut more than 1,000 jobs as it reorganizes its U.K. wealth management team. Most of the cuts will affect relationship managers who don’t have the qualifications to provide financial advice.
Credit Suisse has sold its private equity business, CS Strategic Partners, to alternative investment giant Blackstone Group. The business unit’s 26 employees will make the move as well.
Ian Hannam, a former J.P. Morgan dealmaker who stepped down last year to fight a $700,000 regulator fine, has joined mid-cap adviser Strand Partners. The so-called “King of Mining M&A” will reportedly join the firm as chairman. The firm is full of J.P. Morgan vets.
Warren Buffett is looking for some more spice at Berkshire Hathaway’s annual meeting. He has asked a fund manager who is betting against the stock to ask more pointed questions of himself and other top executives.
Most big banks aren’t hiring in commodities, allowing hedge funds and trading houses to pick up much of the slack. Citigroup refuses to play along. The bank just hired two senior bankers from UBS.
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