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US Banking performance & bonus controversies

US Banking performance & bonus controversies

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  • 1. US Banking Performance and Bonus Controversy
    Presented by:
    Praful Anchaliya
  • 2. Primary roles of Bank
    Goods and services
    Central Bank
    Depository credit intermediation
    Industry organization
    Commercial banks
    Savings banks and savings and loan associations
    Credit unions
    Federal Reserve banks
  • 3. Working Conditions
    Hours
    2008- A non supervisory works for 36.2 hours week.2008- 8% of employees, mostly tellers, worked part time.Support staff work a standard 40-hour week.
    Work environment
    Commercial and mortgage loan officers often work out of the office.
    Safe Place to work 
    Some of employees are located primarily at the headquarters or other administrative offices.
  • 4. Employment
    Employment
    2008- Industry employed about 1.8 million wage & salary workers
    74 percent of jobs were in commercial banks
    Mostly bank branch offices employed 38 percent of all employees.
  • 5. Quarterly Net Income
  • 6. Net Interest Margin
  • 7. Factors of Change
  • 8. Industry Consolidation Continues
  • 9. Number of Banks Failure
  • 10. Housing Inventories
  • 11. Salaries and Bonus
  • 12. Bonus facts
    Citigroup, Merrill Lynch and seven other US banks paid $US32.6 billion in bonuses in 2008 while receiving $US175 billion in taxpayer funds under the Troubled Asset Relief Program
    Citigroup and Merrill Lynch suffered losses of more than $US27 billion at each firm ,Yet Citigroup paid out $US5.33 billion and Merrill $US3.6 billion in bonuses.
    Bonuses averaged $US160,420 for Goldman Sachs's 30,067 employees, compared with $US13,580 at Bank of America, employer of 243,000 people.
    Bonuses averaged $US95,286 per employee at Morgan Stanley, $US61,017 at Merrill Lynch and $US38,642 at JPMorgan Chase & Co., which operates large retail and investment banking units.
  • 13. Conclusion
    Example:
    • In the case of Washington Mutual fund , the FDIC stepped in to secure the good assets and deposits, puts these assets into a new company and then sells off those assets to a stronger financial institution.
    • 14. Washington mutals fund’s good assets and deposits were sold to Jamie Dimon of J.P. Morgan.
  • EXAMPLE:
    - Last quarter, Citigroup announced that they will be splitting up their business to Citigroup Holdings Corp. and Citicorp.
    - Both of these companies still operate under the Citi name for the time being, but it allows them to be spun off or sold off easier in the future.
    - Citigroup Holdings Corp. would be the entity that would be spun off into the “bad bank” structure if the government chose that route.
  • 15. Thank You