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Morning Coffee: Hear about the big pay raises at J.P. Morgan? Goldman CFO says the last thing employees want to hear

pay raises, J.P. Morgan, Wall Street, banking, banks, bankers, pay, compensation, comp, salary, salaries, bonus, bonuses

Daniel Pinto of J.P. Morgan

J.P. Morgan posted a record adjusted profit of $26.5bn for 2017, and the bank is rewarding its top executives with hefty pay raises. CEO Jamie Dimon got $29.5m in total compensation, up 5.4% from 2016, and Daniel Pinto, the head of investment banking, got an 11% raise all the way up to $21m, according to Bloomberg.

While it’s unclear whether these big compensation increases for J.P. Morgan executives extend down the ranks, maybe J.P. Morgan’s rank-and-file can expect a bump up in pay too, especially bankers in areas like ECM and DCM, where revenues rose by double digits on a percentage basis last year.

What about Dimon’s other deputies, you ask? They also received raises: Gordon Smith, head of consumer banking, earned $20m, a 5.3% increase; Mary Callahan Erdoes, CEO of asset management, got $19.5m, a 2.6% raise; Marianne Lake, CFO, received $13.5m, an 8% increase; and Doug Petno, head of commercial banking, earned $12m, a 9.1% increase.

Separately, to date equities trading jobs have been impacted negatively by the rise of automated/algorithmic/electronic trading while fixed-income trading jobs have been relatively unscathed. However, Goldman Sachs CFO Marty Chavez says all of that is about to change.

That message came across Chavez, a former Silicon Valley startup founder, issued that warning to bond traders during a conference call for Goldman’s fourth-quarter and year-end results. He’s spearheaded a spending push to analyze how traders, salespeople and support personnel work – and automating many of those processes.

Wall Street has been debating how far computers can push into fixed income for a while now. Corporate credit in particular has been the most resistant to electronic trading. However, Chavez has taken on this challenge of automating trading in credit, applying insights gleaned from equities trading to fixed income.

“Historically you would often hear people say, ‘Well, all this works great for equities or homogeneous products’,” including currencies, Chavez said on the earnings call. However, he believes that increased computing power means that automated trading algorithms “can handle that extra complexity.”

In the second half of 2017, Goldman hired senior sales staff, coverage bankers and technologists in an attempt to boost revenues in its struggling fixed income, currencies, commodities (FICC) business. That hiring spree needs to pay off, otherwise the technologists might be the only ones whose jobs are safe.

Meanwhile:

To convince veteran tech professionals to work for them, banks have had to make changes. (FT)

The ugly truth concealed by banks’ tax-cut optimism. (Bloomberg)

A year after several high-profile ex-Goldmanites joined the current administration, Trump remains the impulsive, freewheeling provocateur in chief, and much of the Goldman contingent has been banished or is leaving the White House. (New York Times)

Citi promised to close the pay gap – but there’s a catch. (Bloomberg)

Bank of America Merrill Lynch is losing its second global head of technology, media and telecom investment banking in less than a year. (CNBC)

Deutsche Bank CEO John Cryan’s master plan to restore growth has entered a “third phase.” (Bloomberg)

Deutsche’s retail staff is stampeding toward the exit with voluntary buyouts, as the bank’s effort to trim its workforce was met with more enthusiasm than anticipated. Maybe it could try the same in the investment bank? (Handelsblatt)

Junior accountants, CFOs and senior financial controllers working in London will receive pay raises of 4%, representing the largest percentage increases among City jobs. (CityAM)

This former social worker has become a hero of short-sellers and a thorn in banks’ side. (Bloomberg)

U.S. banks are facing a growing threat from cyberattackers and relying on third-party firms for support rather than hiring in-house. (Bloomberg)

Morgan Stanley now clears Bitcoin futures contracts for big institutional clients and convenes a regular meeting of executives to consider how else to engage with cryptocurrencies. (Bloomberg)

New York’s governor wants to end the carried-interest loophole for hedge fund and private equity professionals. (Bloomberg)

Buyers of hedge fund managers’ Greenwich, Connecticut, mansions in 4Q 2017 got the biggest discounts since the fall of Lehman Brothers. (Bloomberg)

Your personality is keeping you from getting a Wall Street job. (Bloomberg)


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