Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Bonus Stockings To Be Filled With Coal


Wall Street readies for a very unmerry holiday season

Every November, delis, pizza parlors and sushi joints throughout Manhattan enjoy a boon to their evening takeout business: Wall Street traders and bankers start putting in late night face time to juice their annual bonuses.

Every November, that is, except this one.

The ongoing financial crisis has forced firms around the world to take almost $700 billion in losses, according to Bloomberg. As bonus season looms on Wall Street, expectations are bleak.

Two studies, released today by the Options Group and compensation consultant Johnson Associates, will detail just how bad things are. Estimates vary, but Wall Street bonuses will likely drop by between 20-70%, depending on position in the pecking order. The departments most responsible for the massive losses, primarily structured credit and mortgage-backed securities, will face the steepest reductions, but no group will be left untouched.

According to the Wall Street Journal, firms like Goldman Sachs (GS) and Morgan Stanley (MS) typically hand out half of all revenue to employees. Particularly at these bulge bracket companies, the bulk of that money comes in the form of end-of-year bonuses.

Now that these firms have accepted government money to help shore up their balance sheets, increased scrutiny is being placed on bonus payouts - especially at the top. Goldman Sachs CEO Lloyd Blankfein is being urged to forgo his 2008 bonus, despite his firm's ability to ride out the crisis better than most.

But financial firms aren't just cutting bonuses in an attempt to keep cash close to home. They're also handing out pink slips.

Bloomberg is reporting Goldman started a round of layoffs yesterday that will result in a reduced headcount of around 3,200, or 10% of its total employees. Many analysts expect Goldman to post its first quarterly loss since the financial crisis began last year, when it reports earnings for its fiscal fourth quarter in December.

Not to be outdone, Citigroup (C) is said to be eliminating 9,100 positions over the next 12 months, or 2.6% of its massive workforce. CEO Vikrim Pandit has been aggressively cutting costs since he took the helm last year, and this would not the first time Citi has laid off staff to slim down its bloated operations.

These and other job cuts in industries throughout the economy all add up to one ugly jobs report, due out before the market opens tomorrow. Some expect job losses for the past month to be as high as 200,000, bringing the year's total to over one million.

If things don't turn around quickly, those delis and sushi joints may have to start in with some layoffs of their own.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opin= =3D =3D3D ion about the performance of securities and financial markets by = the wr=3D iter=3D3D s whose articles appear on the site. The views expresse= d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi= a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web= site is intended to con=3D stitute a recom=3D3D mendation or advice address= ed to an individual investor =3D or category of inve=3D3D stors to purchase= , sell or hold any security, or to =3D take any action with re=3D3D spect t= o the prospective movement of the securit=3D ies markets or to solicit t=3D= 3D he purchase or sale of any security. Any inv=3D estment decisions must b= e made =3D3D by the reader either individually or in =3D consultation with = his or her invest=3D3D ment professional. Minyanville write=3D rs and staff= may trade or hold position=3D3D s in securities that are discuss=3D ed in = articles appearing on the website. Wr=3D3D iters of articles are requir=3D = ed to disclose whether they have a position in =3D3D any stock or fund disc= us=3D sed in an article, but are not permitted to disclos=3D3D e the size o= r direct=3D ion of the position. Nothing on this website is intende=3D3D d = to solicit bus=3D iness of any kind for a writer's business or fund. Mi= ny=3D3D anville mana=3D gement and staff as well as contributing writers wi= ll not respo=3D3D nd to em=3D ails or other communications requesting inves= tment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos