The banks that won’t be able to afford bonuses in 2024
If you’ve been following the news, you’ve probably heard that investment banking revenues are back. You might even be expecting a bigger bonus as a result. Unfortunately, you may be wrong.
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That’s because not every bank was created equal, according to analysis from the Boston Consulting Group (BCG). The firm said that, while the top five US banks (JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America, and Citi) increased their collective wallet share in the first nine months of the year, tier two “Universal Banks”, of which there were 60, lost wallet share across the board.
Based on BCG's definition, these universal banks would include Barclays, Deutsche Bank, and BNP Paribas, among others.
BCG blames the failure of second-tier banks on their “lower operational efficiency,” mostly due to legacy tech stacks and “limited resource capabilities”. It says they also have the disadvantage of being more internationally spread – big bulge bracket banks based in the US benefited from the generally healthier recovery in banking revenue in that country.
The other firms that did well were the “independent” investment banking firms (not to be confused with advisory boutiques), which benefited from a strong customer base, despite being hamstrung by their lack of balance sheet “access”.
What does this mean for bonuses? It’s a pretty simple concept: more revenue, more bonuses. Banks that can increase their wallet share as global fees grow can reward the people that work there. Those that failed to increase revenues (or wallet share) can’t be paid.
How are you expecting your bonus to look for this year? Let us know in our bonus expectations survey.
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