Bank bonus outlook 2010/11 New regulations and lower revenues are expected to shrink bonuses for global investment bankers by Eric Moskowitz
November 2010 Estimated bonuses will be flat to down 5 percent on average for the largest global financial services firms compared with 2009. Asset management, hedge fund, and private equity firms will receive slightly higher bonuses (10 to 15 percent), while fixed income and equity personnel will see the largest declines across the globe.
“It’s not about the money. It’s about the game,” quipped fictional financier Gordon Gekko in the recent “Wall Street” movie sequel. But this time of year might make even Mr. Gekko rethink that sentiment. Since Labor Day, conversation topic No. 1 in investment banking circles has been bonuses, which make up 80 to 90 percent of top officers’ total compensation. Secretive discussions over how much higher or lower bonuses will be compared with last year are not only a sign that the global banking industry truly has come back from the brink, but also highlights the renewed importance of banks determining the right blend of year-end payments. To follow is a preview of 2010/2011 bonus expectations in the financial services industry as prepared by Korn/Ferry International based upon market research and in-depth conversations with key banking clients and sources around the world. The early word on the Street (or the City [London] or the Central [HK]) is that bonuses for the largest global financial services firms will be relatively flat to down 5 percent on average versus 2009. Lower revenue and compensation outlays, combined with appreciably higher employee counts versus 12 months ago, will make it difficult for management to be aggressive. Fourth-quarter business also will affect final bonus decisions significantly because of the choppiness of banks’ results so far this year.