UK
Will they fall? Won’t they fall? By how much – and where?
Last year’s bonuses may have been a whopping 14bn according to the Office of National Statistics, but unless liquidity returns rapidly to the credit markets, this year’s don’t look like measuring up.
Do you expect bonuses to bottom out? And is it about time they did so anyway, given the best paid financiers clocked up the average annual US salary in just 10 minutes last year?
No one knows yet – you can’t say what bonuses will be like until full year figures come out. Even though bonuses are segregated across different divisions, surprise, surprise – banks will pay down if they’re going under. But guess what – we’re all going to have to wait until the fourth quarter to find out….
Most businesses are still pretty sound.
Hi, i am an associate at a top tier bank, working in FX Sales & Structuring. We are heading to exceed our target for the year as a desk and also as a wider business group. What can i expect in terms of bonus prospects? I am approaching my 5th year in the market and (was) hoping to be promoted to VP next year. Am i likely to have a bonus down on last year (in absolute terms), or should there still be incremental gain for people in junior roles as they get more senior?
At the risk of snuffing out any flickers of optimism, UBS released a research note today predicting that 2H07 profits will be down 42% at Credit Suisse and 50% at Deutsche. It added that,’This is predominantly driven by the investment banking divisions…’ They’re also predicting that capital market earnings across Barclays, BNP Paribas, Credit Suisse, Deutsche, RBS and SocGen will fall 30% in 2008 from their rate in 1H07.
Doesn’t look good…
And…on the cross-subsidisation issue, UBS is forecasting banks will take a US$8.5bn revenue hit in 2008 vs. 2006 from the decline in the structured credit market. Either there will be a lot fewer people working in structured credit, or they’ll be paid a lot less – or both.
As Mr Insightful points out, it is complete speculation as to what the bonus payout will be like for 2007. But then speculation is not exactly an alien concept to the financial markets. I would be surprised if any of the tier 1 or 2 banks’ profits survive unscathed once the dust has settled and as such it is fair to presume that the bonus pool will be considerably less than last year’s record awards.
I’m inclined to the view that the pool could be as much as 35% less than last year and certainly no less than 20%. Whatever the actual amount, bonuses will be down for the vast majority whatever function or product you’re working.
FX would seem to have good protection and FX structurers (and to a slightly lesser degree, sales) remain in strong demand but it nevertheless unlikely that a 5 year junior VP would earn the same this year as one of similar experience would have last year.
Anyone, at any level, will be fortunate to enjoy last year’s bonus so preparing yourself for less is probably the most realistic.
What planet do you people live on? Structured products exposures are so large banks are going to need to hold onto as much cash as they can. Of course the real stars will get paid, but generally bonuses will be way down.
The first 6 months have been exceptionnaly good and there is still 4 months to come.
I am not sure that bonuses here will fall that much; and I expect them to be higher in some areas…
Bonuses.. haha! what bonuses.. Although some teams have met their budget we will see management making excuses to pay us less. At least up until Analyst 3 level there will not be any miracles (they get paid next July so they might as well pack it in). For others esp. Fixed income (structured products esp.), Leveraged Finance bonuses will not be good. Unless people are fired before bonus day and their share gets apportioned.
To be honest I would be happy just to have a job at the end of it. If there is a tunnel, I am not seeing the light at the end of it.
I’m alright Jack. whatever happens my ABN bonus is guaranteed to be at least same as last year.
subprime mortgages is not a huge percentage of the mbs market. however, there’s no liquidity in the market and no deals are getting done (even the really good ones). plus, conduits and sivs are liquidating assets. it’s not a huge percentage of the market but between the leverage investors use to buy fixed income and the exposure to mbs on a bank’s balance sheet, it can bring someone down. look what’s happening to countrywide? i work in credit and also am hoping i have a job at the end of this. either that or maybe it’s time to start that excercise studio, art gallery, or raise horses….