On average, the majority of investment bankers in London could be taking home a lower bonus package in 2015 compared to last year, according to a study. Crowd sourced salary benchmarking company Emolument based its forecast on the correlation between bankers' bonuses and deal volumes for the last three years.
According to the study:
- Bonuses for traders and employees in fixed income, commodities and currencies (FICC) could slide by about 9% compared to 2014;
- Bonuses for employees in the advisory and underwriting division were likely to decline between 3% and 5% from 2014. Though this year had a record number of M&A deals, there was a sharp fall in IPOs (initial public offerings);
- Led by a drop in FICC trading income, earnings at investment banks are forecast to slide by 2% from 2014;
- However, bucking the trend are equities traders and staff, whose bonuses could witness an increase of 2% to 3%. This could be attributed to a recovery in volumes after a weak performance in 2014;
- Managing directors in equities are estimated to get a bonus of £361,000 (€501,850, $545,067);
- Directors across investment banks are estimated to receive between £114,000 and £151,000; and
- Associates could expect between £28,000 and £32,000 in bonuses
Alice Leguay, co-founder and COO at Emolument said: "With ever more restricted bonus pools, it may be that doughnuts (zero bonuses) become more commonplace, as banks limit substantial bonus payments to key outperforming staff they simply cannot afford to lose."
Bonuses could be reduced for employees of banks who have paid misconduct fines. On the other hand, in an effort to compensate for low bonuses, some firms are hiking the fixed pay component of employees.
In January, it was reported that top London bankers' average pay in 2013 was 50 times the UK annual average wage.
The Wall Street's payout could be similar to the pattern in Europe.
According to a forecast in November by pay consultancy Johnson Associates:
- Bonuses in FICC will slide between 10% and 20% from 2014;
- Underwriting bonuses could decline between 5% and 15%;
- Equities bonuses will be flat up to 10%; and
- Bonuses for M&A employees should rise between 15% and 20%