Early indications are that 2009 could be a good year for pay

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Evidently, there is no guarantee that the future will resemble the past, but this hasn't stopped the New York Times from speculating what might happen if this were the case.

The paper points out that the rate at which many banks accrued compensation in the first quarter suggests a year of generous remuneration if it's perpetuated over the next three quarters.

In particular, banks still seem under pressure to pay their remaining people, despite the healthy supply of their former employees trying to get back into the market. At Morgan Stanley, for example, the compensation ratio jumped to 68% in the first quarter.

It's dubious whether the next three quarters will be as good as the first, however. As various people have pointed out, last quarter's performance may have more to do with AIG unwinds, wide spreads and a low cost of funding than any fundamental recovery. A recent note from Credit Suisse pointed out that, "the revenue line [for European wholesale banks] is less than half its 2007 level, while costs have not been reduced by anything like as much."

First quarter pay:

First quarter pay.

First quarter pay.

Source: New York Times (upper graph gives name of bank and compensation ratio at that firm, graph directly below shows annualised pay per head at the same bank based on Q1 payouts).

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