Investment bankers brace for yet another slump in bonuses

afr.com:

Investment bankers can expect another year of weak bonuses as Wall Street firms succumb to a global slump in dealmaking.

Bonuses are projected to slump up to 25 per cent globally for bankers in mergers and acquisitions advisory, compared to last year’s compensation packages, while those underwriting capital markets deals could see their bonuses shrink around 10 per cent, data from US-based compensation consultants Johnson Associates showed.

Wall Street’s biggest investment bankers are expected to rake in weaker bonuses for their work this year as the slowdown in global dealmaking weighs on banks’ expenses. Reuters

The new data is the latest blow to investment banks, now far removed from the heady days of 2021, when cheap capital enabled dealmakers to raise billions through initial public offerings, and take home some of the biggest bonuses since the 2008 financial crisis. A slump in transactions has seen international banks from Goldman Sachs to Morgan Stanley slash jobs to curb expenses.

Globally, fees from M&A fell roughly 37 per cent in the first half of 2023, while M&A volumes sunk 40 per cent to $US1.34 trillion ($2 trillion), Dealogic data showed. Australian and New Zealand M&A work garnered $US337 million in fees by the end of July, down from $US916 million a year earlier. In equity capital markets, fees hit $US186 million, compared to $US225 million in July 2022.

While dealmaking volumes in Australia only fell approximately 10 per cent last year, compared to about 30 per cent throughout Asia-Pacific, local bankers at global shops like JPMorgan and Goldman Sachs all share from a worldwide bonus pool that allocates a set amount of compensation to each region. This means Australia’s investment bankers’ compensation