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Wall Street has too many bankers and they are paid too much given the challenges facing the industry, according to James Gorman, the chief executive of Morgan Stanley.He said the bank will examine a further round of retrenchment next year.
“There’s way too much capacity and compensation is way too high,” Mr Gorman told the Financial Times. “As a shareholder, I’m sort of sympathetic to the shareholder view that the industry is still overpaid.”
The comments from Mr Gorman comes on the eve of third-quarter results from Wall Street which are expected to underline the pressures revenues at banks remain under.
A weak economic recovery in the U.S., alongside Europe’s debt crisis, has hit trading volumes in bonds and shares. The industry is also grappling with new regulations passed in the U.S. in the wake of the financial crisis.
When revenues fell during previous downturns banks would increase the proportion that went on compensation to keep workers, said Mr Gorman.
“That’s a classic Wall Street case of ‘Heads I win; tails you lose,'” he said. “The current Wall Street management is a little tougher-minded about that and shareholders are certainly tougher minded.”
Wall Street banks have cut over 20,000 jobs so far this year, according to recruitment firm Challenger. Analysts expect those cuts to deepen unless revenues pick up.