Morgan Stanley bankers who were hoping John Mack would take pity on them again this year are due to be disappointed. Last December Mack raided the coffers to stump up a 5% increase in average compensation for 2007 over 2006, but he now appears to have decided his people can do without. Whereas the average Morgan Stanley banker had accrued $108.3k in salary and bonus by this time last year, that figure is now down to $63.8k – a drop of 40%.

Instead of hanging on for a paltry bonus, the better bet at Morgan Stanley might be to get oneself laid off. The bank’s Q2 figures show that it made a total of $245m in severance payments to 660 staff last quarter, an average of $371.2k.

Big redundancies look inevitable. Morgan Stanley reported a 38% year on year drop in revenues and a 57% drop in profits, despite one-off income from the sale of its Spanish wealth management unit and index provider MSCI (DealBook). At the same time, it actually managed to end this quarter with 545 more staff than it had in May last year.

Some of those redundancies may even be in Asia, where revenues fell 25% – against a 14% drop in EMEA.

Oh, and there was the requisite rogue trader in London (Financial Times.)