Bankers Expect a 7% Drop in Bonuses
Reuters explains that unlike other professionals, bankers typically rely on year-end bonuses for a large portion of their yearly compensation, which can typically account for about 80% of top-level employees' pay. This year, they've been told to expect a low payout because weak trading results are depressing bank profits and shrinking the bonus pool.
In response, the European Union has limited how much upfront cash bankers can be awarded to as little as 20% of their bonus. In the U.S., lawmakers are considering whether to require banks to hold onto a chunk of executive pay, according to a Wall Street Journal report.
The Reuters poll also pointed to higher payouts in Asia, where business is booming, and to flat-to-smaller bonus pools in Europe. In general, however, those working in mergers and acquisitions, where volumes have risen this year, are expecting much higher bonuses.
Still, bankers will be hard pressed to find much sympathy as their base salaries were boosted this year to compensate for the lower bonuses and, possibly, to make them less bonus-focused, reckless risk-takers. In some cases base salaries were even doubled.