Bankers to feel the deepest cuts in this coming bonus season
afr.comInvestment bankers and equities sales and trading teams are likely to be hit the hardest during Wall Street’s next round of bonus payments.
The slump in global mergers and acquisitions activity, and a slowdown in equities trading, coupled with cost cuts at banks in the last year, mean M&A advisers and some trading desks will have a shallower international bonus pool distributed to employees.
While the figures are focused on larger US- and European-based banking teams, Australian arms of global investment banks all share a worldwide bonus pool.
Citigroup’s Jane Fraser is one Wall Street chief executive who has slashed jobs to cut company expenses. Bloomberg
Australian, or Asia-Pacific, bosses will often negotiate with their global bosses in New York or London to garner as big a share of the bonus pie as possible. This means local investment bankers’ compensation is linked to the global performance of their firm.
Corporate advisory teams are projected to receive a 15-25 per cent reduction in their bonuses compared to last year’s work, while equities sales and trading teams are expected to have a 5-10 per cent cut in variable pay, data from compensation consultants Johnson Associates showed on Wednesday.
Junior bankers often receive a cash bonus in one lump sum, while senior bankers receive cash and stock. Investment banks based in the United States typically announce bonuses in January and European banks pay their staff in February. Macquarie pays bonuses in May, while another local investment bank, Barrenjoey Partners, pays its bankers in monthly instalments.
Three bankers, who all requested anonymity to discuss pay, had already braced for a deep cut in variable pay for their 2023 workload. One junior banker said higher
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