US banks reveal mixed fortunes post-Lehman

BONUSES and bad debts remained in the spotlight yesterday as more United States banking giants revealed how they fared in the year after the Lehman Brothers collapse.

Morgan Stanley – employer of some 6,000 UK staff – said it had put aside $14.4 billion (8.9bn) for staff compensation and benefits in 2009, an increase of 31 per cent.

The firm posted annual profits of $1.3bn in the 12 months to 31 December, from a loss of $246 million in 2008.

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Chief executive and president James Gorman said employees had "delivered substantially improved financial performance" for the bank.

Morgan Stanley, which said its revenue was hurt by an accounting charge resulting from the continuing improvement of credit markets, saw its investment banking operation profit from its Smith Barney joint venture.

Meanwhile, Bank of America Merrill Lynch, which saw customers struggle with mortgage and credit card repayments, reported full-year losses of $2.2bn after it repaid the US government's $45bn bailout.

The bank, which has 12,500 staff in the UK, including 5,000 at its MBNA credit card arm, set aside $48.6bn to cover soured loans in the year – almost double the amount in 2008.

The firm, reporting with the Merrill Lynch business included for the first full year, said overall personnel costs had increased to $31.5bn, from $18.4bn in 2008. It said staff numbers increased from 240,000 to 283,000 in the period.