World bankers brace for seven per­cent drop in bonuses: Poll

The Pak Banker - - Front Page -

NEW YORK: From Wall Street to the City of London to Hong Kong's Cen­tral District, bankers are brac­ing for bonuses to be down 7 per­cent on av­er­age from a year ago, and higher salaries will only par­tially cush­ion the hit, a Reuters/IFR global poll shows.

Some fi­nance in­dus­try pro­fes­sion­als are ex­pect­ing drops as steep as 30 per­cent af­ter weak trad­ing re­sults that are de­press­ing bank prof- its and shrink­ing the bonus pool, ac­cord­ing to the poll of more than 25 pro­fes­sion­als.

Un­like in other in­dus­tries, bankers typ­i­cally rely on year-end bonuses for a large por­tion of their yearly com­pen­sa­tion.

Al­though most banks have not yet in­formed staff of their ac­tual bonuses for 2010, the dis­mal ex­pec­ta­tions re­flect the fact that gen­er­ally bankers, traders, and sales­peo­ple have been told to be ready for a low pay­out. "Flat is the new up," one U.S. banker said.

A London-based in­vest­ment bank­ing an­a­lyst said, "You would have to live in cuckoo land to ex­pect bonuses to be up on last year. Even if you're a star per­former you're go­ing to be down."

This is a sharp turn­around from last year, when Wall Street bonuses jumped 17 per­cent on av­er­age, ac­cord­ing to a re­port by New York State's comptroller.

The find­ings from the Reuters/IFR poll are in line with ex­ec­u­tive search in­dus­try re­ports.

The poll pointed to heftier pay­outs in Asia, where busi­ness is boom­ing, and to flat-to-smaller bonus pools for Euro­pean and United States bankers.

Bonuses may not be strong, but bankers are re­ceiv­ing higher salaries, which re­duces the hit to to­tal in­come. Many banks have boosted salaries this year on the the­ory that con­cen­trat­ing com­pen­sa­tion into sky-high year-end bonuses en­cour­ages reck­less risk-tak­ing. Some salaries have dou­bled, ac­cord­ing to com­pen­sa­tion con­sul­tants.

Even so, bonuses still typ­i­cally ac­count for about 80 per­cent of toplevel em­ploy­ees' com­pen­sa­tion, said Joe Sor­rentino, com­pen­sa­tion con- sul­tant at Steven Hall & Part­ners in New York.

Banks' rev­enues have been pres­sured this year by weaker trad­ing vol­umes. The one bright spot has been merger ad­vi­sory, where vol­umes have risen from last year, but where prof­its are typ­i­cally low com­pared with trad­ing.

Bankers' bonuses be­came a hot­but­ton is­sue world­wide af­ter gov­ern­ments pro­vided tril­lions of dol­lars to bail out banks dur­ing the fi­nan­cial cri­sis in 2008. Just a year later, banks were back to big bonuses, at­tract­ing the ire of tax­pay­ers and politi­cians who com­plained that banks' prof­its were pri­va­tized and losses were so­cial­ized. The Euro­pean Union has re­sponded with tough guide­lines on bonuses that limit how much up­front cash bankers can be awarded to as lit­tle as 20 per­cent of their bonus. -PB News

IS­LAM­ABAD: Hon­or­able Amanda Fazio, Pres­i­dent Leg­isla­tive Coun­cil of New South Wales Assem­bly, Aus­tralia called on Act­ing Pres­i­dent Fa­rooq H. Naek at Par­lia­ment House. -App

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