A cheat sheet for who deserves a higher bonus and who does not
It's November and if you want some respite from thoughts about the US election, you could turn your mind to thoughts about this year's bonus. It's not uncommon to want a bigger one, but banks are not in an equal position to be generous and teams are not equally deserving of that generosity anyway.
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If you're wondering who should and who shouldn't get paid more this year than last year, market intelligence firm Tricumen, has produced the following helpful charts.
Based upon Tricumen's appraisal of revenue by business area, which itself reflects Tricumen's interviews with market participants, plus publicly available data from quarterly and regulatory filings, the charts below indicate revenue performance year-on-year to date and in the third quarter.
Green arrows are good. Red arrows are not.
The key takeaways seem to be that HSBC's equities salespeople and traders should feel hopeful about the coming bonus round, and that RBC's equities salespeople and traders should not. Goldman Sachs' M&A bankers might want to brace themselves for a bad year, along with colleagues at JPMorgan, Morgan Stanley and Bank of America.
Needless to say, though, revenue increases aren't everything. 2023 may simply have been an abnormally bad revenue year (as for Barclays, in M&A) which makes 2024 seem comparatively strong. While UBS bankers appear to be thriving, this is partly by virtue of their new colleagues from Credit Suisse, who will want a share of their increased revenues. And while Barclays' credit traders appear to be struggling, this might be attributed to reduced risk appetite and attempts to curtail risk weighted asset consumption by the investment bank. Sources say the real determinants of bonuses now are a complex interaction of revenues, revenues per head, and balance sheet efficiency.
Nonetheless, all things being equal, the tables above are a starting point for this year's bonus negotiations. Performance in markets especially, though, may change dramatically after this week. The head of one bank in London says there's still a lot to play for: "At this time of the year, you usually know if it's been an especially bad or good year, but November is always big for markets' revenues and the US election means this year it's going to be bigger than ever."
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