Lunchtime Links: Costs at Morgan Stanley and Bank of America are spiralling out of control; the bank that’s doing some big hiring; where to apply if you lose your job at Man Group

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Morgan Stanley and Bank of America have both reported their fourth quarter results today. There is good news from both. Whether that good news outweighs the bad news is, however, questionable.

In good news, Bank of America’s sales and trading business performed considerably better after an atrocious third quarter in which its normalized FICC revenues fell 91%: in Q4, sales and trading revenues across equities and fixed income, excluding DVA, rose 70% compared to Q3.

In other good news, Morgan Stanley is paying its investment bankers more: compensation and benefits costs in its institutional securities division were up 3% for the full year.

The bad news, at both banks, is that costs appear to be consuming ever-increasing proportions of revenues. Bank of America made a net loss of $433m in its investment bank in the fourth quarter. At Morgan Stanley, the institutional securities division made a Q4 net loss of $394m.

Bank of America doesn’t break out its compensation costs specifically but for 2011 as a whole total costs accounted for 77% of revenues in the global banking and markets division, up from 63% for 2010.

At Morgan Stanley, compensation costs accounted for 75% of revenues in the investment bank in the fourth quarter, clarifying precisely why it is that the bank feels the need to make 1,600 redundancies. 

In other news, Man Group is making 150 redundancies. However, another hedge fund is hiring inLondon. Connecticut-based Graham Capital Management reportedly intends to hire 10 people in the UK this year to work on its discretionary macro and quantitative strategies.

And finally, there are banks that are still expanding.  Take Russia’s VTB: it’s just announced a new head of global fixed income sales who previously worked at Goldman Sachs and has poached Nomura’s head of emerging markets to be its chief executive for the Middle East and Africa.  Chief executive Atanas Bostandjiev says he intends to hire another 50 bankers in the next two years, at least half of whom will be devoted to markets beyond Russia and Eastern Europe.


Fast VTB Growth raises eyebrows. (Moscow Times) 

Morgan Stanley is warning staff members that more cuts may be coming. (Fox Business) 

Deutsche has made its second round of redundancies in less than 2 months and cut 30 people in Toyko. (Bloomberg) 

Goldman shares rose 7% yesterday. (Bloomberg) 

Although RBS’s share price has halved, Stephen Hester will receive a bonus of more than £1m. (Telegraph)  

Actually, no decision has been made yet on Hester’s bonus. (Telegraph) 

The average bonus for a City lawyer rose to 32% of salary last year, up from 25% in 2010, to reach £35.5k. Base salaries rose 4% to £110k. (The Times) 

Goldman has paid its employees $125bn during the past 10 years (doubling along the way), twice what it made in net profits. (Financial Times) 

Tony Blair offers unpaid internship in his London office. (Guy Fawkes) 

Humour will improve your brain function. (Harvard Business Review)  

Bernard-Henri Lévy on ratings agencies: “We were waging war on the infantilization of the mind implied by this obsession with evaluation and against the inevitable correlate that would result from it, the transformation of beings into things, dehumanization.” (Huffington Post)