Investment banks may reduce compensation for commodity traders as much as 75 per cent as prices of oil and copper fall the most in at least two decades.
The best paid metals and energy traders may earn $1 million to $1.5 million in salary, bonus and related pay this year, down from $5 million to $8 million in 2007, according to estimates by London-based recruitment company Kennedy Associates. Bonuses at Goldman Sachs Group Inc. and Morgan Stanley, the biggest oil- trading banks on Wall Street, may fall 60 per cent, according to Armstrong International, another London-based recruiter.
“At the end of the day, the commodity industry is not bullet-proof,” said Jason Kennedy, 38, chief executive officer of Kennedy Associates, whose clients include Merrill Lynch & Co. “It’s following the trend.”
Banks and hedge funds that piled into raw materials as crude, copper and gold rallied for seven straight years, cut jobs during the second half as the Reuters/Jefferies CRB Index tracking prices of grains, fuels and metals declined, heading for its biggest annual drop ever. Goldman Sachs dismissed 10 per cent of its employees in November, including in commodities. Zurich- based UBS AG, Switzerland’s biggest bank, said in October it will end over-the-counter trading in industrial metals and energy.
“The manic scramble in commodities in 2007 and early 2008 has calmed down,” said Shaun Springer, 52, chief executive officer of Napier Scott Executive Search Ltd., which has recruited for banks since 1992. “It has moved from a frenzy to nigh on dormant.”