Last year was an unprecedented bonanza for Wall Street bankers — and it was fun while it lasted.
Bonuses for bankers at big financial firms — which hit record highs in 2021 amid a rash of big deals and a dire talent shortage on Wall Street — are expected to drop as much as 40% in 2022 as bank profits plummet, according to new data from compensation consulting firm Johnson Associates…
“Deals and IPOs are cyclical — we were expecting a hangover for 2022 but it’s worse than imagined,” Alan Johnson of Johnson Associates told The Post. “That’s brought deal making to a stop — and on top of that there’s a good chance we’re going into a recession.”
Johnson is quick to note that even a minimal dropoff in pay will feel dramatic given record inflation. “If pay is down 15% that’s going to feel like 22% or 23%,” Johnson adds.
It’s a dramatic turn of events for an industry that came roaring back to life amid the pandemic. But bonuses mirror the performance of banks — and banks have been struggling this year.
Last year top banks like Morgan Stanley and Goldman Sachs spent roughly 20% to 25% more on compensation — raising the cost of expenses significantly. This year, they may look to cut back.
“I think some of this uncertainty is why firms have been thoughtful and careful about bringing people back,” Johnson adds. “It’s a tough conversation to have with employees that pay is down and we want you to commute an hour a day.”
On the positive side, sales and trading divisions, which saw profits decline as pandemic volatility slowed in 2021, are expected to capitalize on market uncertainty yet again — and some traders may nab bonuses in 2022 that are 20% higher than the previous year.
New York Post / May 5, 2022