Wall Street to the City of London to Hong Kong’s Central District, bankers are
bracing for bonuses to be down 7 per cent on average from a year ago, and
higher salaries will only partially cushion the hit, a global poll shows.
Some finance industry professionals
are expecting drops as steep as 30 per cent after weak trading results that are
depressing bank profits and shrinking the bonus pool, according to the poll of
more than 25 professionals.
Unlike in other industries, bankers
typically rely on year-end bonuses for a large portion of their yearly
Although most banks have not yet
informed staff of their actual bonuses for 2010, the dismal expectations
reflect the fact that generally bankers, traders, and salespeople have been
told to be ready for a low payout.
“Flat is the new up,” one
U.S. banker said.
A London-based investment banking
analyst said, “You would have to live in cuckoo land to expect bonuses to
be up on last year. Even if you’re a star performer you’re going to be
This is a sharp turnaround from
last year, when Wall Street bonuses jumped 17 per cent on average, according to
a report by New York State’s comptroller.
The poll pointed to heftier payouts
in Asia, where business is booming and to flat-to-smaller bonus pools for
European and United States bankers.
Bonuses may not be strong, but
bankers are receiving higher salaries, which reduces the hit to total income.
Many banks have boosted salaries
this year on the theory that concentrating compensation into sky-high year-end
bonuses encourages reckless risk-taking. Some salaries have doubled, according
to compensation consultants.