JPMorgan's tiny bonuses for junior bankers matched by its giant demand for engineers
When JPMorgan announced its intention to target $77bn of spending this year at the time of its second quarter results, it caused a bit of an upset. "You’re holding firm with your $77 billion expense guidance for 2022. I mean, it’s like you’re acting like there’s sunny skies ahead. You’re out buying kayaks, surfboards, wave runners just before the storm", asked notoriously crotchety banking analyst Mike Mayo at Wells Fargo. "So is it tough times or not?"
The answer, to paraphrase JPMorgan CEO Jamie Dimon, is that tough times are ahead, but they're transitory and that JPMorgan needs to continue investing. JPMorgan is still spending $14bn this year on technology and still, for example, building a $100m risk and fraud system for consumer payments. It's still spending an extra 30% on new technology this year alone, and as of today, it's now hiring an extra 2,000 engineers to add to its existing 50,000 technology staff globally. An "economic hurricane" may be coming, but technology investments are sheltered from the storm.
Junior bankers' bonuses, however, are not. The latest survey of bonuses for junior bankers in London by search firm Dartmouth Partners suggests that JPMorgan cut bonuses for its first-year analysts from the £44k it awarded in summer 2021 to just £21k ($23k) this year. Dartmouth says JPMorgan's analyst bonuses were cut more than at any other bank.
JPMorgan's first year analysts can, of course, console themselves with the fact that their salaries are among the highest in London (at £70k) and have increased twice in the past 18 months, but still. This year's total compensation for first years averages around £86k. Last year, even with the lower salaries, it was closer to £94k.
This doesn't mean that JPMorgan's engineers are themselves immune to cost pressure. Daniel Pinto, JPMorgan's engineer and COO has been talking about making the bank's technology investments more "efficient" for a long while. Equally, JPMorgan's London technology staff are paid a lot less than its London investment bankers at equal levels of the hierarchy, even the bank has been spied paying $300k salaries to some VP-level engineers in San Francisco.
"The market has completely changed in the last year," one JPM developer complained in May. "Goldman Sachs and Morgan Stanley pay more now, and so do Deutsche Bank and Barclays. Even entry level software engineers at Morgan Stanley are on £75k."
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