JP Morgan yesterday announced predictions that would see a deterioration in investment banking revenues in the second half of 2012. An interesting point in Kian Abouhossein’s report is this little table which looks at employee affordability:
The table tracks investment banking compensation as a percentage of revenues. At the end of 2011, one thing was clear: the Swiss banks (UBS and Credit Suisse) were paying too much, with Credit Suisse especially looking a little out of control, Morgan Stanley also looked out of kilter too.
The challenge now is to reduce pay as a percentage of money coming in. Abouhossein and his colleagues think this will happen almost everywhere, except possibly BNP Paribas.