Exclusive: JPMorgan plans to keep pay roughly flat from last year -sources
By Nadia Damouni and David Henry
(Reuters) - JPMorgan Chase & Co (JPM.N: Quote) plans to keep overall compensation roughly flat this year from last year, in a sign that employees will feel at least some pain from the bank's recent legal settlements, according to two sources familiar with the matter.
Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but JPMorgan's decision would put the bank on the lower end of expectations for the rest of the industry.
Earlier this month, compensation consultant Johnson Associates estimated that commercial and retail bankers overall will get bonuses that are unchanged to 5 percent higher this year. It estimated bonuses across all of Wall Street, including large asset management firms, will be up 5 to 10 percent.
Options Group estimated that average pay will rise 4 percent.
At JPMorgan, bonuses were largely locked down early this week, though payouts could change in unusual situations or if there is an unexpected change in the company's results during the last six weeks of the year, said the sources, who spoke on the condition of anonymity.
About 156,000 of JPMorgan's 255,000 employees work in retail, mortgage and credit card businesses, where pay is generally lower than in its investment bank.
In the third quarter, JPMorgan lost $380 million after it set aside more than $7 billion, after taxes, to cover litigation expenses. It was the bank's first quarterly loss since 2004.
JPMorgan, the biggest U.S. bank by assets, could have taken more dramatic steps to cut costs after recent settlements, like cutting pay across the board or reducing staff. But the bank's executives believe the legal costs are a temporary drain on profits, and do not want to force current employees to bear too much of the burden of the settlements. Continued...