Some Wall Street bonuses could be cut by nearly half this year as companies scramble to manage costs
Wall Street bankers raked in their biggest bonuses since the 2008 financial crisis last year, and set a new record. This year? Not much.
That 2021 boom is short-lived for people in finance, and they may be looking at year-end bonuses that are almost half what they were, according to a new study.
Bankers handling equity and debt underwriting are expected to receive bonuses between 40% and 45% lower than 2021 levels, according to a published study. Tuesday by Johnson Associatesa compensation consulting firm.
Their counterparts at hedge funds that advise on mergers and acquisitions will also see their bonuses drop, but by a little more—about 15% to 20%.
“The industry was at a bubble level last year,” said Alan Johnson, chief executive officer of Johnson Associates. told Reuters on sky-high asset valuations in 2021. “The bubble has burst and now we’re feeling the hangover.”
There are a few reasons why bankers have been hit this year. According to the study, mergers and acquisitions slow down in 2022 after booming in 2021, while sluggish fundraising and falling value of portfolio companies lead to profits. lower margins for banks and transaction-related financial services.
However, not all finance jobs will lose the usual annual bonus – in trading and fixed income sales, bonuses are expected to grow between 15% and 20% by 2022. compared to last year.
However, it’s not just bonuses that are making an impact when it comes to the financial sector. With soaring inflation plaguing companies around the world, many of them are laying off employees or pulling back on hiring plans as a way to cut costs, increase uncertainty in the industry. Some of the biggest banks in the United States have begun laying off their staff to manage headcount amid Wall Street’s plunge.
Goldman book was the first company to start laying off employees in September and last week, Citigroup and Barclays according to suit, CNBC report. Morgan Stanley is contemplating cutting the number of investment bankers in Asia, Bloomberg report in the first day of this month.
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