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It’s a Wall Street rebound.
Just two years after they grasped a taxpayer bailout, Bank of America and Morgan Stanley may be on track to ring up record revenues in 2010.
Morgan Stanley, fueled by its close working ties with Washington, has generated revenues of $23.8 billion during the first three quarters of the year, according to data compiled by Barclays Capital. That tally puts the firm on pace to eclipse its record $29.83 billion in 2006.
To be sure, much of that performance benefits from the acquisition of a majority stake in brokerage unit Smith Barney from Citigroup, which was completed last year. And so far trading has been Morgan Stanley’s Achilles heel and continues to drag down the firm’s performance compared to rival Goldman Sachs.
Run by James Gorman, Morgan Stanley has been reaping the rewards of a tight relationship with Uncle Sam. The white shoe firm has advised the government on a number of high-profile deals, including the $23.1 billion public offering of General Motors.
Meanwhile, BofA, which acquired Countrywide Financial and Merrill Lynch during the financial crisis, has generated operating revenue so far this year of $83.8 billion, putting it in range to surpass the $105 billion it posted in 2009.
The robust revenue totals from the top five Wall Street firms are in part derived from the $135 billion in taxpayer funds they received from Uncle Sam’s Troubled Asset Relief Program.
What’s more, the top five — Goldman, JPMorgan Chase, BofA, Citi and Morgan Stanley — are likely to post higher revenue from trading and investment banking in the fourth quarter than they rung up in the first half of the year, when uncertainty zapped trading activity, according to Bloomberg News.
Even Citigroup, the one-time bailout basket case, has set the stage to beat last year’s revenue mark of $77.4 billion after reporting revenue of $67.8 billion in the first three quarters.
Looking ahead, a tougher regulatory climate and an expected slowdown in trading is predicted to weigh on business and yield lower bonuses.
The Options Group, an executive search and strategic consulting firm, said bonuses are expected to be down by 25 percent, while total compensation, including salary, is expected to decline by as much as 20 percent.
But such a trend would be welcomed by 70 percent of Americans, who believe bonuses should be banned, according to a national poll, Bloomberg reported.