Banks that paid cautious bonuses in 2021 forced to redeem themselves
If you are looking for an indication of the pressure on investment banks to increase bonuses in 2021 compared to 2020, then Bank of America is what you need. After standing quietly in the shadows and watching as Goldman Sachs and JPMorgan proclaimed their intention to increase bonuses by 50% and 40% respectively, Bank of America has now decided to do something similar.
Bloomberg reported on Friday that Bank of America plans to increase bonuses for its investment bankers by “over 40%” this year, and that it plans to increase bonuses for people in its sales and trading activities. trading of “more than 30%”. This happens even though commissions received by BofA investment bankers last year only increased by 32%, and even though income from selling and trading fixed income securities fell by 9% in the first nine months and income from sales and trading of shares only increased by 23%.
BofA pays on odds to keep its people happy.
Of course, the bank also reserves the right to inflict some deception. The folks at BofA briefing Bloomberg said bonuses for his bankers could ‘vary widely depending on individual team performance, with a certain significantly below average. In fixed income trading, some parts of the business have done “particularly well” and are likely to be paid more than others.
Overall, however, BofA’s statement suggests that the substantial bonus increases coming to Goldman Sachs and JPMorgan put pressure on rivals to dig in the same way. At Bank of America, the pressure to pay is particularly acute after the bank allocated relatively stingy bonuses in 2021 for 2020, prompting headhunters to warn of a wave of quits if the bonuses disappoint again. Bloomberg says that the next generous BofA bonuses (which are still being confirmed) will reflect ‘how companies have performed over the past two years, ”implying that they will be partly to make up for last year’s parsimony.
So the question now is whether other banks will be forced to do something similar. Citi and Morgan Stanley have been mysteriously silent about the size of their bonuses. Deutsche Bank and Barclays have indicated that their bonuses will increase by 20% and 25% respectively, which seems a bit disappointing under the circumstances.
Banks that don’t want to increase bonuses by huge amounts have a reasonable excuse. – After two years of high income, 2022 could be the year of the return of the banking sector to earth. However, this is precisely what BofA’s own bank analyst Ebrahim Poonawala suggested in a note last week, and the bank appears to have bypassed Poonawala’s exit clause. Instead, it looks like Bank of America after Tom Montag will pay even better than BofA when Montag was there.
In addition, it is not easy to be a rate strategist in the current market. It’s even harder to be a rate strategist who’s also a working mom with school-aged kids.
Priya Misra, head of rate strategy at TD Securities, says she already lacks sleep for just a week in the year. On the one hand, Misra says she still has to deal with COVID issues that include testing her children before school every morning, on the other hand, her job is more and more demanding: “IInstead of a rate cut and Fed easing, we’re focusing on how quickly the Fed is pulling out and how much rates can go up. It can make anyone’s head spin.
Although she is 43 years old and started her banking career in 2001, Misra thinks to herself that she has not “experienced many episodes of a hawkish Fed. This makes the current situation even more difficult to manage.
During this time…
Citi and Morgan Stanley are expected to communicate the bonuses first, with both advising staff on Thursday. (Business intern)
Citigroup staff in New York who don’t get vaccinated until Jan. 14 will be put on unpaid leave and fired at the end of the month. More than 90% are vaccinated. (Bloomberg)
Credit Suisse President Antonio Horta-Osorio to be reprimanded for breaking COVID rules a second time and attending the Wimbledon tennis final without following UK quarantine rules. (Reuters)
Bob Sternfels, McKinsey & Co’s new managing partner, said the consulting firm placed less emphasis on employee tenure as a condition for promotion. “WThis means a lot more flexibility on partnering time, a lot more flexibility on partnering paths, and a lot more flexibility on how to make an impact over time. “(WSJ)
The problem with Hong Kong: it’s the third least vaccinated advanced economy, with only 62% of its population having received two doses of the vaccine. Only 23% of the population over 80 received a first dose. (Bloomberg)
Citadel was the best performing multi-strategy fund last year, yielding 26%. (Bloomberg)
“You may have to go until 2024 before [banks’] incomes are higher than they were in 2021. (Financial Times)
How my husband got addicted to day trading and racked up £ 300,000 in debt. (The temperature)
In 2021, 27 major crypto firms hired 8,700 people. Many have doubled in size. (The block)
Larry Fink has a duck ringing on his cell phone. (WSJ)
A lawyer who claimed he was harassed at work for farting lost his case for discrimination. (Rollo Friday)
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