Calgary Herald

Wall Street bonuses tempered by uneven performanc­es


The Wall Street traders who generated windfalls at banks this year may reap more modest rewards than they initially hoped for.

The biggest U.S. lenders are tempering expectatio­ns for employee payouts after the global pandemic spurred an avalanche of trading activity and sent revenues soaring. At Bank of America Corp., plans to keep the bonus pool for sales and trading at last year's level disappoint­ed some staff. Citigroup Inc. will leave the overall pot unchanged for equities, while boosting it for bond traders by at least 10 per cent. More generous increases approachin­g 20 per cent are under discussion at Jpmorgan Chase & Co. and Goldman Sachs Group Inc., but even within those firms, bonuses will probably vary widely.

“The general tone across the Street is somewhat pessimisti­c,” said Paul Sorbera, president of Wall Street executive search firm Alliance Consulting in New York. “It's going to be a mess” for managers to make compensati­on decisions given the uneven performanc­e across different teams this year, he said.

The reality check comes amid a global pandemic that's upended economies and roiled markets. As industry executives lock in year-end compensati­on decisions, they'll have to weigh stellar trading performanc­e against the potential for loan losses in consumer and corporate-lending divisions. Banks are also wary of making big payouts to bankers, which could draw criticism from the public and lawmakers as millions are out of work.

Even against that backdrop, firms have made it a priority to reward their shareholde­rs. The six biggest U.S. banks will be able to buy back as much as US$11 billion of their own shares in the first quarter of next year after the Federal Reserve gave lenders the green light to resume purchases.

“We've got to be mindful of our returns and our shareholde­rs, we've got to be mindful of our environmen­t that we're in and the many challenges that are out there for people and certain businesses,” Citigroup Chief Executive Officer Michael Corbat said. “And at the same time we have to be competitiv­e. In our industry, we're fortunate to have good talent. And we've got to recognize that.”

“Management is very concerned with people getting the notion that they're going to get paid proportion­ately to the increase in revenue,” Sorbera said. “That's not happening.”

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