It’s an annual tradition on Wall Street for bankers to negotiate bigger bonuses. This year, they’ll probably get their way.
A year and a half into the pandemic, American banking giants have made bumper profits from an economic recovery that has supercharged markets for deals and stock trading. That could translate into bonuses that are 30 percent to 35 percent higher for investment bankers who underwrite equity or bond offerings, according to estimates from Johnson Associates, a Wall Street compensation consultancy. Payouts may surge to the highest levels since before the 2008 financial crisis, it said.
Financiers who advise on mergers and acquisitions, as well as equities traders and salespeople, can expect bumps of 20 percent to 25 percent as financial firms pay up to keep top performers from leaving.
“There is a staffing shortage, so in addition to the pay levels, there’s a real demand for talent,” Alan Johnson, the managing director of Johnson Associates, said in an interview. “Every client we talk to is having difficulty getting recruits.”
The labor crunch extends well beyond Wall Street to industries where pay is significantly lower. Wages have jumped in recent months, especially in the service sector, and more workers are going on strike. In finance, the tight market means that high-performing bankers will probably go job shopping and jump ship in the first three months of the year after bonuses hit their accounts.
“When you have a crisis, you usually have a lull in turnover, people get risk averse, hold onto their jobs, hunker down,” Mr. Johnson said. “But as we go to the middle of ’21 and ’22, there’s going to be more turnover.”