tag:blogger.com,1999:blog-5433839636644874439.post7510837775333160503..comments2024-03-04T13:37:11.022+00:00Comments on Canadian Financial DIY: UK & US Banks: Profits Down while Staff Salaries RiseCanadianInvestorhttp://www.blogger.com/profile/05645767559302303541noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5433839636644874439.post-3655993825254809862010-06-28T19:08:22.137+00:002010-06-28T19:08:22.137+00:00I'm not claiming that any particular set of ba...I'm not claiming that any particular set of banks has acted properly or improperly. However, it seems to me that bank revenue would likely be more volatile than bank payroll. It doesn't make sense to me for a stable business to be able to cut payroll costs by 20% if they experience a sudden 20% revenue drop. It is difficult to hire and fire people quickly. This would mean that as revenue rises, payroll should rise more slowly (or at least lag for a while), and when revenue drops, payroll should drop more slowly. Of course, over time, they have to stay in balance. If I'm right about this, then a reasonably-run bank would see payroll drop by less than revenue drops in bad times. Similarly, payroll increases should lag revenue increases in good times.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5433839636644874439.post-53851683536027211932010-06-28T18:56:28.963+00:002010-06-28T18:56:28.963+00:00MJ, isn't cutting only 10% while business is d...MJ, isn't cutting only 10% while business is down 20% exactly a case of the employees getting off more lightly? As well, in the case of UK banks at least, there was a sustained increase in staff cost burden during the good years preceding the 2008 crash when revenues were going up. When I see bank execs today saying they must keep the "talent" it says to me the wrong mentality is still there. Remember the good ole days of the tech crash layoffs? - no matter how good you were, when whole divisions were being wiped out, it was everyone axed. Not so in banking it seems, The absence of consequences for bankers as harsh as the damage done to the real economy / everyone else leaves open the question whether any "never happen again" lessons have been learned in that industry. It would be interesting in that context to see a survey of banker personal current net worth statements.CanadianInvestorhttps://www.blogger.com/profile/05645767559302303541noreply@blogger.comtag:blogger.com,1999:blog-5433839636644874439.post-26139231527564511732010-06-28T14:48:31.590+00:002010-06-28T14:48:31.590+00:00Is this just a consequence of revenue having dropp...Is this just a consequence of revenue having dropped? If a bank's revenue dropped 20% and they trimmed total salary payments by 10%, then the percentage of revenue that goes to salary will go up.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.com