Investment bankers brace for bonus slump as fee haul shrinks
Bankers are resigned to another year of weak bonuses as a global glut in deal making across mergers and acquisitions and capital markets slims fees at investment banks.
Despite this year’s slump in transactions, bankers expect fortunes to rebound next year. Greater certainty around interest rates should encourage companies with healthy balance sheets to raise capital to fuel growth and finance M&A ambitions, managing directors at leading investment banks told The Australian Financial Review.
From left: Marissa Freund, Goldman Sachs’ head of M&A; Richard Hersey, Morgan Stanley M&A head; Sean Miller, RBC Capital’s head of investment banking; Dan Janes, head of investment banking at Bank of America. AFR
Bonuses – typically announced in January for banks headquartered in the United States – are projected to shrink as much as 25 per cent globally from last year. Fees from Australian investment banking activities for the first nine months of the year were down 43 per cent year-on-year to $US1.5 billion ($2.4 billion), data from Refinitiv showed.
“Yes, volumes are down, no doubt. But you need to appreciate they are down to where the levels were pre-2020. We have had an inflated environment over the last three years,” said Sean Miller, the head of investment banking at RBC Capital Markets.
“What has impacted deal flow is the broader macro environment. When we have seen more control on inflation, you would expect more corporate activity to ensue.”
The absence of headline-grabbing $1 billion-plus initial public offerings that propped up deal volumes in 2021 hurt overall deal flow, while the biggest M&A efforts – such as Allkem and Livent’s $15 billion lithium tie-up in May – were restricted to natural resources.
To cut costs, Wall
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