If you're a front office investment banker at JPMorgan, yesterday's news that the bank will spend even more money on controls in 2014 can only be bad news.
JPMorgan has already increased its control spending. The U.S. bank splurged an additional $1bn on controls this year and has hired an extra 4,000 people across risk, compliance, legal, finance, technology, oversight and control since the start of 2012. Yesterday, CEO Jamie Dimon said the pace of control spending would intensify still further and that the bank will be spending an additional $2bn on controls in 2014 in attempt to get a grip on its operations.
However, what sounds like good news for all risk, compliance and audit professionals sounds like bad news for JPMorgan's front office investment bankers. Despite the tide of control spending, Dimon predicted that overall expenses at JPMorgan will fall in 2014. As control spending increases by $1bn, another $1bn will therefore need to be cut elsewhere. Dimon indicated that the bank will pull out of entire business areas which are too risky or insufficiently profitable. Investment banking compensation also seems an obvious target for any cuts. JPMorgan has already indicated that its bonuses this year will be the same as they were last year. Next year, they may well fall.
Separately, the British regulator is now going after individual traders in its efforts to punish LIBOR-related misdemeanors. Bloomberg reports that the Financial Conduct Authority has sent notices to individual traders asking them to pay fines of £100k+ from their own pockets. The traders concerned have two months to respond. If they don't pay the fines, they may lose their approved persons status and be unable to work again in the City.
The new fines follow two successful cases in which LIBOR traders who lost their jobs as a result of the scandal have been compensated for wrongful dismissal. Dong Kun Lee, a former rates trader at Barclays in New York, received $2m in compensation and several rates traders at Deutsche Bank in Germany were reinstated in their roles after the bank was found to have wrongly dismissed them.
Not all ex-LIBOR traders have been as fortunate though. Tom Hayes, the former RBS LIBOR trader who once earned millions of pounds a year, is now reliant upon government aid as he seeks to defend himself against charges of criminal fraud.
Heavy drinking ex-Glencore trader Andrew Kearns has lost his case against the commodity trader and will have to pay £150k in costs. (Telegraph)
Robert Half says pay for banks’ risk and compliance officers in Singapore and Hong Kong rose at about twice the pace of similar positions in New York and London this year amid a shortage of skilled staff. (Bloomberg)
A New York law firm is poised to pay out year-end bonuses of as much as $300k to some of its associates, with the average young lawyer taking home an additional $85k. (Dealbook)
Where the prop traders went next. (WSJ)
Obscure C++ features. (MadebyEvan)
66% of Goldman’s Twitter followers are either fake followers or inactive. (BankersUmbrella)
Credit Suisse chairman says Swiss people can lack an "inner generosity." (CreditSuisse)