Job cuts, smaller bonuses loom for Wall Street bankers, consultant says

on Aug4
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People walk by the New York Stock Exchange on May 12, 2022 in New York City.

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Investment bankers hit with a collapse in equity and debt issuance this year are in line for bonuses that are up to 50% smaller than 2021 — and they are the lucky ones.

Pay cuts are expected across wide swaths of the financial industry as bonus season approaches, according to a report released Thursday by compensation consultancy Johnson Associates.

Bankers involved in underwriting securities face bonus cuts of 40% to 45% or more, according to the report, while merger advisors are in line for bonuses that are 20% to 25% smaller. Those in asset management will see cuts of 15% to 20%, while private equity workers may see declines of up to 10%, depending on the size of their firms.

“There are going to be a lot of people who are down 50%,” Alan Johnson, managing director of the namesake firm, said in an interview. “What’s unusual about this is that it comes so soon after a terrific year last year. That, plus you have high inflation eating into people’s compensation.”

Wall Street is grappling with steep declines in capital markets activity as IPOs slowed to a crawl, the pace of acquisitions fell and stocks had their worst first half since 1970. The moment epitomizes the feast-or-famine nature of the industry, which enjoyed a two-year bull market for deals, fueled by trillions of dollars in support for businesses and markets unleashed during the pandemic.

In response, the six biggest U.S. banks added a combined 59,757 employees from the start of 2020 through the middle of 2022, according to company filings.

Gloomy forecast

Salary bump

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