This is bonus-giving season and last year brought most in the profession a bonanza, reflecting record profits among Wall Street companies during 1993. For many, the bonus was worth many times more than their regular salary. Last February somebody earning a nominal $150,000 a year, might easily have taken home $1m.
Last year, though, went differently for Wall Street, with average company profits down by a half. The bond market had its worst year in over a decade thanks largely to rising interest rates. Thus the scaled-back bonuses today. By most estimates, they are down by an average of 40 per cent.
Some, though, may feel thankful they still have a job. This week has seen some high-profile redundancy announcements and everyone is feeling the draught. Two came just on Monday: at Salomon Brothers and CS First Boston.
Salomon, which recently reported a loss of $364m in 1994, decided to close down its private client broking operation and lop off 115 jobs. Catering only to very rich individuals, the department has not made a profit for Salomon since its inception nine years ago.
The move, meanwhile, is widely considered to be only the first instalment of a broader retrenchment this year that could bring redundancies to 500.
CS First Boston, meanwhile, has taken several steps back, notably by deciding to close down its municipal bond department. The company also revealed that its profits last year were down 52 per cent to $156m. First Boston will close three US regional offices and merge its investment management operations with Credit Suisse, its sister firm. Overall, the restructuring at First Boston is expected to result in a10-15 per cent reduction in its staff.
With municipal bond trading still in a trough, other companies are also cutting back, including Merrill Lynch and Goldman Sachs. Donaldson, Lufkin & Jenrette closed down its municipal bond department last month and fired 125 employees. But the worst may soon be over. The bond market is showing signs of stabilising. Valentines night business may have been down a little at the high-price midtown restaurants yesterday. But who knows, next year may be all bubbles and roses again.