REVEALED: WALL STREET BANKS’ BONUS BONANZA
NEARLY 5,000 bankers at the top nine US lenders were paid bonuses of more than $1m in 2008, despite their employers receiving $175bn (£106bn) in taxpayer-backed bailout funds, it was revealed yesterday.
New York attorney general Andrew Cuomo found that staff at the banks, all of which received funds via the Troubled Asset Relief Programme (Tarp), were awarded a total of $32.6bn in 2008.
In a report entitled “The ‘heads I win, tails you lose’ bank bonus culture”, Cuomo said there was “no clear rhyme or reason to the way banks compensate and reward employees”.
Wall Street giants Citigroup and Merrill Lynch paid out nearly $9bn in bonuses between them, despite suffering combined losses of $54bn and taking state aid totalling $55bn.
At JPMorgan Chase, which took $25bn in Tarp funding, an astonishing 1,626 of the company’s 225,000-strong workforce received bonuses of more than $1m.
The top four recipients alone were awarded $74.8m, with the total bonus pool reaching $8.69bn, $5.9bn of which was paid in cash. Ten bankers received bonuses of $10m or more, 29 made $8m, 84 received $5m, 130 made $4m and over 200 received bonuses of $3m or more.
Goldman Sachs, which took $10bn from Tarp, paid six employees more than $10m, 21 took home more than $8m, 78 made $5m or more and 95 grabbed a bonus of more than $4m.
Merrill Lynch, which was bought in a $50bn deal by Bank of America at the end of last year, was one of the most extravagant with its top earners, doling out $121m to its four highest-paid employees. Fourteen bankers earned a bonus of more than $10m, while 20 received $8m or more and 53 were handed at least $5m.
Merrill’s new parent company Bank of America was less generous, awarding its four top executives $64.01m. Four individuals received bonuses of $10m or more, 8 of $8m, 10 of $5m or more, 28 of $3m or more, and 65 of $2m or more.
Citigroup however, which received the largest Tarp injection of $45bn, paid bonuses of more than $1m to 124 employees, with three individuals handed more than $10m, 13 given more than $8m and a further 44 awarded more than $5m.
Morgan Stanley handed out the largest pay packets as a percentage of revenue, allocating 72 per cent of its second-quarter revenue in 2009 to compensation.
The bank put aside $3.9bn for compensation for the quarter, during which it booked net revenues of $5.4bn.
In a document accompanying the data, Cuomo said: “Even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks’ financial performance”.
Cuomo singled out comments from one senior executive, who suggested that “employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak.”