If you're looking for a way to moderate bonus expectations ahead of a tight bonus round, it helps to make people focus on something else. Like actually having a job.
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This is what Bank of America seems to have achieved with yesterday's surprise cuts three days before bonuses are announced. Before the cuts, it seems that people there were slightly optimistic. Since the cuts, they are not. «Compensation expectations have been butchered,» says one recently departed MD.
Bank of America isn't commenting on the cuts, which are thought to be comparatively minor compared to other banks, and which come after BofA spent last year practicing the art of moving staff internally and not filling vacated roles as an alternative to actively cutting headcount.
Both our sources in London and the Litquidity Instagram account, quoting unnamed insiders, say that the cuts seem to have come to BofA's equity capital markets (ECM) bankers more than others. «ECM was hit hard,» says the ex-MD. Litquidity claims the cuts hit ECM VPs and above. In Asia, BofA cut Sunil Khaitan, its South East Asian head of ECM.
As we noted yesterday, BofA's Asian investment banking revenues fell 73% in Asia last year, so cuts there always seemed likely. Globally, however, ECM revenues at the bank were up 35% last year, making the cuts more of a surprise.
Speaking during the investor call following BofA's third quarter results, CEO Brian Moynihan said the 'pipeline was full' and «stuff» was getting done. However, he also remarked, «where is the clarity?,» without which a real rebound in dealmaking is unlikely.
JPMorgan CFO Jeremy Barnum was more explicit on the issues facing ECM bankers. Last year's IPOs
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