At the beginning of this year, we wrote that Wall Street bonuses could fall as much as 40% despite record years for banks, especially in trading and dealmaking.
Credit Suisse – as we suggested would happen back in December – is joining this trend is now reported to be considering cutting its bonus pool by “at least” 10%. The bank is in the midst of discussing its 2020 discretionary payments and will begin to give employees the news over the coming week, Bloomberg said.
The report also noted that a reduction to the bonus pool could extend to as much as 15%. The company’s overall bonus pool for 2019 was reduced by 1% from 2018 and stayed flat the year before.
Recall, back in December, Credit Suisse CEO Thomas Gottstein blamed the cuts on social responsibility, stating that “it’s too early to say, but generally you have to expect that bonuses will be down compared to last year and this is part of our solidarity and social responsibility. This is a challenge, but it’s something the whole industry is facing.”
In an interview with FT, Gottstein said he was trying for a “clean slate” to start 2021 after the bank was mired with a corporate spying scandal and the bank’s involvement with names like Luckin Coffee and Wirecard.
“There will never be a totally clean slate. We will always have issues, but it’s certainly my goal to start 2021 with as clean a slate as possible,” he said. “My clear intention is to work through these legacy cases. 2021 is the new era for Credit Suisse where we want to go into offence and we want to grow.”
Meanwhile, we also reported late last year that bonuses at Goldman could wind up jumping 20% for some employees – namely its trading division.
The bonuses would be the result of a 49% rise in revenue for the division, according to Bloomberg. Some niche areas of trading, like fixed income, “could expect much bigger payouts”, the report notes, as Goldman seeks to prevent its key traders from moving to rivals like Citadel and Point 72. Bonuses were said to be contingent upon how the firm handled “any setbacks” over the last few weeks of the year.
JP Morgan is also boosting bonuses for sales and trading workers by 15% to 20%.
We pointed out at the start of this year that bonuses could fall “as much as 40%” and that “Wall Street firms are likely to cut pay for almost everyone and defer more of it to save cash.” Consultant Alan Johnson of Johnson Associates, said “great” employees could see a 15% decline in bonuses with “meaningful deferrals” and that “sub-par” employees could see bonuses drop 50% or more.
Johnson admitted the time is ripe for change: “Now is the time to get rid of the people you probably should have gotten rid of before. The industry has been carrying some extra weight for a while.”
Meanwhile, as FT noted several weeks ago, banks brought in a record $124.5 billion in fees in 2020.
The same piece noted that Wall Street’s biggest firms generated a record $37 billion of investment banking fees in 2020. Here’s how that stacks up over the past decade:
In fact, Jason Goldberg, an analyst at Barclays, said: “It was a “very robust year for underwriting both debt and equity. You saw a bump [in 2020] as companies looked to access capital markets to shore up their balance sheets in the face of pandemic-related uncertainty.”