At the top of Wall Street’s biggest investment banks, executives are finalizing plans to give traders and M&A professionals the biggest bonus increases since the pandemic, with increases of 10% — or more — for many sectors, according to with sources informed about the plans.
At Bank of America, that’s the average increase expected for investment bankers and traders who deal in equities and fixed-income products, said sources with direct knowledge of the decisions, who asked not to be identified discussing personnel matters. At Morgan Stanley and biggest competitor JPMorgan Chase, bonuses are expected to increase by more than 10% for traders, sources familiar with the deliberations said. And for JPMorgan’s investment bankers, bonuses are expected to increase by about 15%.
Among senior industry executives, Goldman Sachs is widely expected to go even further for some of its trading sectors. Spokespeople for all banks declined to comment.
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The increases follow two years of retrenchment across the industry as investment banks struggled to maintain the frenzy of deals and mergers they dealt with at the height of the coronavirus pandemic. In many sectors, a year ago, relatively modest increases were not enough to keep up with inflation.
Now, managers are planning increases that reflect a recovery in business, as well as some optimism for next year. After all, trading revenue at the four companies increased by less than 10% in the first nine months of last year. Raising bonuses more quickly can help ensure employees stick around for more business to come.
Wall Street’s year-end rewards are notoriously volatile as the industry goes through boom-and-bust cycles. When times are good, individual earnings can reach millions of dollars—multiples of what bankers and traders can earn in salaries.
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The average numbers described by insiders do not reflect the more generous rewards reserved for “rainmakers” [uma pessoa que traz novos clientes e negócios para uma empresa, gerando uma grande quantidade de receita]or the disappointment reserved for those marked by supervisors as low performers.
When the pandemic spread in 2020, Wall Street firms were initially reluctant to pass on gains that could prove temporary. But as competition for talent increased, they raised payments for 2021. Rising interest rates subsequently put the brakes on business, keeping bonuses in check.
Bank leaders began defining the latest bond funds late last year and have been communicating those decisions to middle managers in recent weeks. The US banking industry is expected to start reporting financial results next week.
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Compensation consultants have predicted for months that investment bankers, traders, and asset and wealth management professionals would see double-digit raises in this round — potentially exceeding 20% in certain lines of business within broader divisions.
A November report from Johnson Associates Inc., for example, predicted that equity underwriters could receive up to 25% more, with debt underwriters getting up to 35%.
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