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Since the business of Wall Street has changed so much since new regulation has hit some of the industry’s revenue streams, some (but few) leaders on the street have told bankers to expect a change in compensation practices.And one of the most outspoken of all of these leaders has been Morgan Stanley’s CEO James Gorman. He told the Financial Times earlier this month that we have “too many overpaid bankers.”
The thing about that is, there’s a widely held belief on the Street that if you lower compensation, your best talent will jump ship for a smaller boutique firm, a bulge bracket competitor, or the buy-side (hedge fund/private equity).
Perhaps not so with Gorman, though — he meant what he said and he stuck to it. Bloomberg reports that according to Morgan Stanley’s 3Q report out this morning, the bank’ set aside $5.2 billion in the first 9 months of this year for investment bank compensation. That’s down 9% since last year.
When looking at compensation figures over this earnings week, though, most banks, like Goldman Sachs, have held their ratios steady (Goldman’s stood firm at 44% of revenue).
Make of that what you will.