Now that brokers are the only working revenue sources for Wall Street, they’re in high demand.
Building the biggest brokerage firm on Wall Street is proving costly to Morgan Stanley and Citigroup Inc., which are planning to pay brokers about $3 billion to keep them from being poached away from the joint venture, people familiar with the matter said.
While the terms aren’t expected to be announced until later this month, the issue could grow politically sensitive, because the U.S. government holds stakes in Citigroup and Morgan Stanley as part of its bailout of the financial system. Morgan Stanley is paying Citigroup $2.7 billion to take control of the joint venture, which was announced last month and will combine its brokerage operation with Citigroup’s Smith Barney unit.
This probably works out to around $200,000 per broker. Realistically, however, that’s not what will happen. Certain top brokers will get millions while the plebes get tens of thousands.
Cue populist outrage now.