(Bloomberg News) Wall Street's cash bonus pool is likely to fall for a second straight year as the financial industry grapples with market turmoil, economic weakness and new rules, New York state Comptroller Thomas DiNapoli said.
Revenue and compensation trends have "edged downward" since February, when DiNapoli estimated that the 2011 pool for Wall Street declined by 13.5 percent to $19.7 billion, the comptroller said today in a report.
"Based on those trends, the total cash bonus pool for work performed in 2012 is likely to decline for a second year in a row," DiNapoli said in a statement.
The last time the pool shrank for two consecutive years was in 2007 and 2008, at the beginning of the global financial crisis, according to the comptroller's office.
Member firms of the New York Stock Exchange earned $10.5 billion in the first half of 2012, and profits may climb to $15 billion by year-end, said DiNapoli, a 58-year-old Democrat. Last year, the firms earned $12.6 billion in the first six months, then lost $4.9 billion as the European debt crisis deepened, he said. Wall Street firms cut 4,800 jobs from May through August of this year, he said.
"The securities industry remains in transition, and volatility in profits and employment show that we have not yet reached the new normal," DiNapoli said. "The securities industry is still grappling with the fallout from the financial crisis, new regulations and slow economic recovery."
Employee Expectations
DiNapoli's forecast of a shrinking bonus pool contrasts with employee expectations. Of 911 financial professionals who responded to a survey e-mailed by eFinancialCareers.com, 48 percent anticipated a higher payout, up from 41 percent in a similar survey last year, the job-search website said in a statement yesterday.
"The mood is better, some people will be happier, but we still have another quarter to go," Constance Melrose, eFinancialCareers.com's managing director in the Americas, said in a telephone interview. "People are less pessimistic than they were a year ago."
Wall Street employees took home an average cash bonus of $121,150 in 2011, according to DiNapoli's February estimate.