US banks and securities firms could pay a record $140 billion to its staff this year, a rebound in compensations that comes despite regulatory scrutiny of Wall Street pay culture, a report said yesterday.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did at the peak year of 2007, according to an analysis by the Wall Street Journal.
It studied securities filings for the first half of 2009 and revenue estimates through year-end.
Total compensation and benefits at publicly traded firms that the Journal analysed were on track to increase 20 per cent from last year's $117 billion, and to top 2007's $130 billion payout.
This year, employees at the companies will earn an estimated $143,400 on average, up almost $2,000 from 2007 levels, it said.
The report came as companies began declaring their third quarter earnings, with financial firms expected to perform well and revenue moving to levels seen before the financial crisis sparked off by a home mortgage meltdown.
JPMorgan Chase reported Wednesday its third quarter profit jumped to $3.6 billion in a further sign of the rebounding fortunes of the banking sector.
The profit however was heavily skewed to investment banking and trading results, which offset weakness in the consumer sector, especially in credit cards.
The group, among the healthiest of the major US banks, said earnings were multiplied nearly by seven from $527 million in the same period a year ago.
Financial firms have been boosted by a stronger stock market, thawing credit market, a resurgence in deal making and the continuing effects of various government aid programmes, even though the economy remains sluggish and unemployment is near double digit levels.
The rebound also reflected growing confidence by some Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the crisis, the Journal said.
So far, regulators and lawmakers have focused on making sure pay practices discouraged excessive risk-taking.
The Journal's analysis included JP Morgan and other banking giants such as Bank of America and Citigroup, securities firms like Goldman Sachs and Morgan Stanley and asset managers such as BlackRock and Franklin Resources.
The total revenues of the firms studied were projected to hit $437 billion, surpassing 2007's $345 billion , according to the analysis.