Wall Street is running out of jobs to cut — so it’s cutting pay

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$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.2.1.0.0">Wall Street Jobs
Michael Nagle | Bloomberg | Getty Images. Banks earnings reflect more cuts to pay, than to headcount. It’s a sign some could be hitting peak efficiency.
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$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$0">Wall Street’s top bankers are getting their pay slashed, but at least they’re keeping their jobs.

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$1">Investment banks cut pay to begin the year, when a disastrous first quarter hampered earnings . But now, even as markets and bank performance rebound — Morgan Stanley (MS) on Wednesday morning became the latest major Wall Street firm to top analysts’ estimates — they’re still slashing compensation.

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$2">It’s a sign that the banking and trading businesses on which Wall Street’s leading banks rely for billions of dollars in revenue are hitting peak efficiency. Having already pared down headcount to get profitable last quarter, it looks like big banks are running out of jobs to cut.

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$3">In its earnings statement, Morgan Stanley said it has cut compensation by 9 percent, from $4.4 billion to $4 billion, on lower revenue . But total staff fell by only 2 percent, to 54,529.

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$4">A day earlier, Goldman Sachs (GS) said it cut compensation by 13 percent from the previous year, but cut only 100 positions over the period (a change of less than 1 percent).

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$5">JPMorgan Chase (JPM) has seen year-over-year headcount rise slightly overall, and the bank just unveiled an initiative to give thousands of low-ranking staffers a pay hike.However, over the same period, JPMorgan saw corporate and investment bank headcount fall by 1 percent. Commercial banks have far bigger teams dedicated to retail transactions and mortgages than the investment banks do.

$tgt1-Col1-3-ContentCanvas-Proxy.$tgt1-Col1-3-ContentCanvas.0.4.0:$6">Experts went into the year predicting cuts to jobs and pay for traders and bankers. Investment banks have been hit hard this year, from a combination of the Brexit forcing Wall Street to consider relocating staffers, to boutique banks elbowing aside institutional behemoths to claim big M&A mandates, to regulators snuffing out big deals that would have made for multimillion dollar paydays.