Equity capital markets dealmakers are likely to see the biggest drop in bonuses this year, according to the latest survey by Johnson Associates, while most business lines are set to for a sharp decline compared to 2021, when deal fees surged to a record $130bn.

Bankers working on M&A transactions could see drops of up to 20% compared to last year, the survey predicts, while debt underwriting roles are set for a similar decline. In a reversal of fortunes, traders are expected to receive an increase this year as the Russia-Ukraine conflict has led to a surge in market volatility.

Fixed-income traders could receive 20% more, Johnson Associates predicts, while equities trader bonuses are set to rise by 5% to 10%.

Equity capital markets activity is down by 71% globally to $177.9bn in 2022, according to data provider Dealogic. Overall investment banking fees have slipped by 36% to $28.7bn.

The battle for top dealmakers is slowing, Alan Johnson, founder of Johnson Associates, told Financial News.

“Hiring was at a feverish pace last year and banks were facing real trouble finding the people they needed,” he said. “It’s gone from 100mph to 60mph — it’s still hot, but it has cooled off significantly since December.”

Banks have hiked salaries for junior staff in a bid to stem an exodus of talent amid a burnout crisis, with Bank of America, Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS among those to have increased pay at least twice over the past year. Salary increases have extended to the senior ranks at some banks.

“Most banks manage their compensation by adding bonuses and base pay, so the salary increases will have a knock in effect of hitting overall pay. Bonuses would have been down anyway, but this is a double impact this year,” said Johnson.

Dow Jones Financial News / May 5, 2022