Year-End Bonus Pots Are Shrinking

Industry professionals won't have long to wait to get a better idea about the likely size of their bonus pots this year-end.

JPMorgan Chase kicks off big bank earnings season this week, publishing its third-quarter profits. And although September is thought to have been a better month for industry earnings, a bad July and August will inevitably mean that most firms had a tough three months. And some analysts are expecting firms like Morgan Stanley to set aside around 15% less in staff compensation for the third-quarter than during the same period last year.

In the meantime, The London Evening Standard reports that Barclays Group Finance Director Chris Lucas has been telling analysts last week that 'revenues across the investment banking industry would fall between 10 - 20% in the third-quarter'.

Finally, it's not just the fact that revenues are under pressure that will impact bonuses this year - new bank regulations will play a part too. Dow Jones Newswires quotes Sanford C. Bernstein analyst Brad Hintz, who says: 'The days of the Wild West Trader won't exist any more on Wall Street', and points out that trading units won't be able to engage in previously profitable activities like securities repurchases, block trading and certain investment grade credit trading, as the cost of capital under the new Basle Committee rules will make it cost prohibitive.

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