November 30, 2023

Investment Banking

Let Your Investment Banking Do The Walking

US banker bonuses to sink as much as 25% on sluggish deals -consultant

U.S. one hundred dollar notes are seen in this picture illustration

U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won/File Photo Acquire Licensing Rights

NEW YORK, Aug 7 (Reuters) – U.S. investment bankers who advise companies on deals can expect their bonuses to sink 20% to 25% this year as markets stay subdued, according to projections from compensation consultant Johnson Associates.

The gloomy outlook will also weigh on investment bankers in debt and equity underwriting, where bonus pools could stay flat or drop as much as 10%, the consultant wrote in a report on Monday.

Wall Street executives have cited a flurry of initial public offerings as an encouraging sign that activity in capital markets will pick up after months in the doldrums.

But top bankers have also cautioned that it is too soon to call a lasting recovery, citing a litany of risks facing the economy, including interest rates, inflation and geopolitical tensions.

Big banks’ underwriting businesses are gaining momentum, but their advisory arms are unlikely to rebound until 2024, keeping a lid on incentive compensation, Johnson Associates said.

Bonuses for stock traders are projected to slip 5% to 10%, while bond traders could see their payouts rise or fall by 5%, the consultant said.

Wall Street bonuses can vary widely. Payouts for employees in the securities industry in New York fell 26% to an average of $176,700 in 2022 from a record $240,400 in 2021, according to a March report from New York State Comptroller Thomas DiNapoli.

The Johnson Associates projections also highlighted the contrasting fortunes of large and small banks. Bonuses for retail and commercial bankers at major global institutions are likely to jump 10% to 20%, while incentive compensation at regional banks will slide 10% to 20%, the study showed.

Reporting by Lananh Nguyen; Editing by Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

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Lananh Nguyen is the U.S. finance editor at Reuters in New York, leading coverage of U.S. banks. She joined Reuters in 2022 after reporting on Wall Street at The New York Times. Lananh spent more than a decade at Bloomberg News in New York and London, where she wrote extensively about banking and financial markets, and she previously worked at Dow Jones Newswires/The Wall Street Journal. Lananh holds a B.A. in political science from Tufts University and an M.Sc. in finance and economic policy from the University of London.