Investment banks are making a motza from the M&A and capital markets deals boom, but bosses are trying to keep a lid on expectations for the upcoming promotions and bonus season.
It’s that time of year when Australian investment bank heads start talking compensation with their bosses offshore, arguing their case for a bigger slice of the global remuneration pool given competition for bankers in the market and the need to reward their chargers after a hard year.
Early expectations are that bonus payments will be up across the street, reflecting record level of advisory and capital markets activity globally at the big investment banks and the step-up in local deal activity.
However, they’re not expected to be anything like the pre-crisis windfalls that saw mid-career bankers able to up and leave and pursue interests outside of the pinstriped prisons. Think 10 per cent up, as one investment banking boss told Street Talk on Monday.
It’s that time of the year when thoughts turn to new Rolexs… Supplied
The other side of the annual compensation talk is promotions. In a good year, banks and their bankers will make more, however banking bosses reckon promotions will be just as hard to come by.
That’s particularly the case for the all-important elevation to “Managing Director”, regarded across the street as the most significant promotion in a banker’s career, which seems to get harder every year, not easier.
Just because banks are doing well this year doesn’t mean activity will hold up next year or next decade. And no boss wants to promote now, only to have to chop when activity drops.
So MD promotions are expected to be the domain of the very deserving – senior executive directors that have had whopper years – or where the bank needs to fill a seat. (It’s arguably easier for a investment bank to win work off a CBA or NAB , for example, when it has a MD pitching as its head of financial institutions). There will be no special promotions round just because there’s step up in activity.
It’s all reflecting the new normal that has come about over the past decade.
Australian investment banking teams are largely ex-growth and bosses are happy to have their troops work harder when it is raining deals (like this year) and less hard when it’s quiet. The money’s good, but it ain’t what it used to be, which means longer careers for fewer bankers.
RBC Capital Markets traditionally kicks off bonus season in December, while the big US banks (Citi, Morgan Stanley, Goldman Sachs, Bank of America, JPMorgan et al) follow soon after in January.
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Investment banks talk bonuses, promotions to cap off big year – The Australian Financial Review
