Banker Bonuses Roped In By Regulators Despite Record 2020 For Financial Industry

But others at the bank, who were not exempted, have been "gathering on calls to vent frustrations and discuss options."

We also wrote back in late December that Goldman Sachs could offer larger bonuses for its traders, as a result of a 49% rise in revenue in the division. Traders who were able to navigate the volatility associated with Covid during the year are more likely to earn fatter bonuses than those who worked in sales, maintaining client relationships, we noted. Goldman believes its success in trading will continue past 2020 and past what is looking increasingly like a one-off sell-off in the market, spurred by the pandemic. 

Meanwhile, as FT noted several weeks ago, banks brought in a record $124.5 billion in fees in 2020.  

While we expect most bankers to be furious for not getting a substantial raise to match the surging revenue of their employers, the news should probably not be a surprise, and as Bloomberg adds hints "have been emerging for weeks that some banks would opt to keep a lid on compensation for Wall Street operations pulling in loads of cash, ending a years-long period in which revenue and compensation have generally moved by similar degrees."

By late November, Bank of America Corp. executives were discussing proposals to keep its bonus pool for sales and trading at the prior year’s level. By December, Citigroup aimed to leave its overall pot unchanged for equities, while boosting it for bond traders by at least 10%. More-generous increases approaching 20% were under discussion in Goldman Sachs and JPMorgan, but even there, the thinking was that moves would vary widely.

In the end, however, the news was bad with Goldman’s earnings showing the firm cut the share of revenue it spent on compensation to 30% last year, down from about 34% or more in the prior three years. At JPMorgan’s corporate and investment banking division the ratio fell to just 24%, down from 28% in those earlier years. Morgan Stanley also shaved two percentage points off its compensation ratio.

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