JPMorgan Chase yesterday lifted a salary freeze instituted at the height of the financial crisis for the bank’s higher-paid workers, in a sign of confidence that the economy was stabilising. After three quarters of record revenues, the bank said that pay rises for workers earning more than $60,000 ( £36,000) would resume early next year.
The bank also said that it would give employees who earned less than $60,000 a $500 “special award” early next year and reinstitute matching pension contributions. The bank has so far set aside $21.8 billion to pay its workers for 2009, up from $17.7 billion at the end of the third quarter last year.
In a memo to staff yesterday, John Donnelly, JPMorgan’s human resources director, wrote that the pay and pension freezes, which he said had been put in place to protect the company in a time of uncertainty, were lifted after a “year-end performance and compensation review process”.
“It is possible that the regulatory rules will change compensation standards,” Mr Donnelly warned. “However we will continue to be committed to being highly competitive and paying for performance.”
At the end of the third quarter, the bank had 220,861 workers, down 7,591 on the same period last year. The company said yesterday that it would hire 325 business bankers as part of a plan to increase lending to small and medium-sized enterprises next year by as much as $4 billion to $10 billion.
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JPMorgan has been one of the fastest banks to recover from the financial crisis that saw its third-quarter net profit shrink to $527 million last year. The company repaid its $25 billion taxpayer bailout in June, avoiding the compensation restrictions imposed by Kenneth Feinberg, the US Government’s “pay czar”, on banks still indebted to the taxpayer.
JPMorgan told its bankers in July that it would raise basic salaries and cut bonuses for employees whose bonuses accounted for between 25 per cent and 50 per cent of their total pay, to meet regulators’ demands for a better balance between risk and reward. The changes to bankers’ pay was not due to come into effect until the beginning of 2010, when compensation for 2009 is decided.
Last month JPMorgan reported record revenue of $28.8 billion for the nine months to September 30 after topping investment banking league tables. Net income for the third quarter was $3.6 billion.