JP Morgan Banksters Get $10 BILLION Pay And Bonus Pot

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• Second-largest US bank JP Morgan beats Wall Street forecasts
• Improved performance in retail banking and credit card arm

JP Morgan bankers are to share $10bn. Photograph: Chris Hondros/Getty Images

Anti-poverty campaigners renewed their call for new taxes on the financial sector after JP Morgan Chase set aside almost $10bn for basic pay and bonuses in its investment banking division.

The Robin Hood Tax campaign said it was “outrageous” that JP Morgan’s investment bankers are to receive an average payout of $369,651 (£233,000) for 2010. The group, which supports a global tax on banks’ financial transactions, said the size of the payments was “a slap in the face to ordinary people”.

David Hillman, spokesman for the campaign, said: “If banks can afford to pay billions in bonuses, they can clearly afford to be taxed a great deal more. A £20bn Robin Hood tax in the UK would help avoid the worst of the cuts and show we are all in this together. While bankers wallow in cash, the general public are suffering unemployment and cuts to public services.”

The remuneration figures were released after JP Morgan Chase kicked off the US banking reporting season by declaring a 47% jump in profits for the last quarter of 2010. America’s second largest bank beat Wall Street forecasts, through improved performance from its retail banking and credit card operations.

JP Morgan said it had allocated $9.73bn (£6.2bn) as “compensation” for its investment bankers, up from $9.33bn in 2009. The average total pay packet fell slightly, though, to $369,651 from $379,986, as the number of employees rose to just over 26,300. The bank, which last month committed to keeping its European headquarters in London, declined to respond to Hillman’s comments.

Staff members will not be told their individual bonuses for several weeks. It is likely that most employees will receive substantially less than the average of nearly $370,000, while some bankers will be very generously rewarded.

Compass, the centre-left think tank, also attacked the size of the bonus pot.

“It is absolutely disrespectful to the public mood and to the taxpayers who bailed out the banking sector only a few years ago,” said Gavin Hayes, general secretary of Compass. “It shows how utterly incompetent this government is at putting pressure on the banks to self-regulate. It is the role of government to stop these obscene bonuses.”

JP Morgan increased the percentage of turnover set aside for salary and bonuses to 37%, from 33% last year. This meant the total pay and bonus pot increased despite JP Morgan’s investment arm making less profit, on lower revenue, than in 2009. For 2010 as a whole, the investment banking arm saw a 4% drop in profits, to $6.64bn, on turnover down 7% to $26.2bn.

Last year JP Morgan handed $550m to the UK Treasury on top of its other taxation payments, under Alistair Darling’s one-off bonus tax. Hayes argued that this levy should be reintroduced and made permanent, but the present government has rejected this in favour of a levy on bank balance sheets.

Overall, JP Morgan made net earnings of $4.8bn for the final three months of last year, up 47%. For 2010 as a whole JP Morgan reported a net income of $17.4bn on revenues of $104.8bn, about 48% higher than a year ago. The increased profits were fuelled by a sharp decline in bad debts. Provisions for credit losses almost halved, to $16.6bn in 2010 from $32bn in 2009. The firm also released some funds which it had set aside to cover losses from the credit crisis.

The bank’s retail financial services division and its credit card arm were both profitable in the last quarter, having made losses a year ago.

Chairman and chief executive Jamie Dimon said that the bank had a “solid” year, but admitted that the crisis in the US housing market was causing problems.

“Credit trends in our credit card and wholesale businesses continued to improve. In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns,” said Dimon. “Although we continue to face challenges, there are signs of stability and growth returning to both the global capital markets and the US economy.”

Goldman Sachs, Morgan Stanley and Citigroup will report results next week, and are also likely to face scrutiny over remuneration levels.

Jill Treanor and Graeme Wearden
Friday 14 January 2011 19.23 GMT

Source: The Guardian

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