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Dissecting pay at Barclays, BAML, CS, Citi, Deutsche, Goldman Sachs, Morgan Stanley and UBS

Where the money will be found

A month ago, we looked at the likely state of compensation at big banks for 2013. Now that big banks have reported their results and allocated bonuses for last year retrospectively, we have a better idea of the quantum and structure of compensation at the key players. This is what you need to know. More information will become available when the banks concerned release their full annual reports.

1. Pay at Barclays’ investment bank 

Pay per head for 2013: £177k ($291k), down 2% on £182k for 2012. The average bonus in Barclays investment bank was £60.1k for 2013, up from £54.5k in 2012.

Bonus pool for 2013: Total Barclay’s bonus pool £2.38bn, up 10% from £2.17bn in 2012. Investment banking bonus pool £1.6bn, up 13% on 2012.

Structure of bonuses for 2013:  £140k reported cap on cash bonuses, down from £185k cap in 2012. Managing directors (MDs) will receive no cash bonuses in 2013. Bonuses to be deferred for three years. 68% of the investment banking bonus pool is being deferred.

CRD IV pay changes:  Barclays is thought to be avoiding the EU’s CRD IV bonus cap by offering role-based pay top-ups in the form of shares.

Happiness index: Resigned. Barclays is restructuring its investment bank and making 220 investment banking MDs and 600 directors redundant in the next six months. As per the cliche, the bonus is keeping your job.

2. Pay at Bank of America Merrill Lynch (BAML) 

Pay per head for 2013: Not given

Bonus pool for 2013: Not given

Structure of bonuses for 2013:  Bank of America has historically frozen cash bonuses for its investment bankers at $150k. 

CRD IV changes:   Bank of America is said to be boosting salaries for some managing directors by 20%. This will take pay for some MDs to $500k. 

Happiness index: Bank of America is said to have cut pay for its rates traders by 15%. However, headhunters said traders in the bank’s credit business were, “very happy.”

3. Pay at Credit Suisse’s investment bank 

Pay per head for 2013: CHF276k ($308k), down 3% on 2012.

Bonus pool for 2013: Not given.

Structure of bonuses for 2013: Senior staff at Credit Suisse are being paid in ‘wipe out bonds’ which will lose value if the firm’s common equity ratio falls below 7%. 20% of 2013’s deferred pay will be paid in these bonds according to Bloomberg. 

CRD IV changes: Not clear.

Happiness index: Headhunters say Credit Suisse’s equities staff were particularly happy with their bonuses for 2013. The bank is pulling back from rates and commodities trading. “Maybe they’ve reallocated pay from those areas,” says one headhunter.

4. Pay at Citi’s Institutional Clients Group 

Pay per head for 2013: Not given.

Bonus pool for 2013: Not given. 

Structure of bonuses for 2013: Citi has paid an unusual amount of cash in its 2013 bonuses. In Europe, the Financial Times reported in January that Citi was paying 50% of its bonuses in cash this year, that bonuses of up to $100k at Citi were paid entirely in cash, that 75% of bonuses up to $499k were paid in immediate cash and that even bonuses of $3.99m were paid as 60% upfront cash.

CRD IV changes:  Not clear

Happiness index: Bankers at Citi are said to be very happy indeed. “Citi’s guys are very happy,” says one London-based fixed income headhunter. “This is the third year that they’ve paid people in fixed income very well – it’s impossible to get anyone out of there.”

5. Pay at Deutsche Bank’s corporate and investment bank

Pay per head for 2013: Not given. However, the bank cut the overall compensation bill in its corporate and investment bank by 14% last year compared to 2012.

Bonus pool for 2013: Not given. 

Structure of bonuses for 2013:  Reuters says Deutsche has capped cash bonuses for its staff at €300k (£249k) for the second year running. However, the scheme is more complex than a simple cash cap. For bonuses of between €100k to €200k, 50% will reportedly be deferred. For bonuses of €200k to €500k, 75% is deferred and for bonuses of €500k to €1m 85% is deferred. Beyond €1m, 100% of bonuses are deferred. Below managing director level, it seems Deutsche’s bonuses are paid over three years – with a third paid in 2015, a third paid in 2016 and a third paid in 2017. At managing director level, Deutsche has retained its punitive five year deferral schedule – with bonuses vesting only in year five.

CRD IV changes: Not clear.

Happiness index:  Low-level disgruntlement.

6. Pay at Goldman Sachs 

Pay per head for 2013: $383k, down from $400k in 2012.

Bonus pool: Not given.

Structure of bonuses for 2013: Not given, but Goldman typically defers over three years and pays a generous amount of cash.

CRD IV changes: Goldman is said to be preparing role-based top ups. We understand that these will be paid annually, although this has not been confirmed by the bank.

Happiness index:  Goldman’s fixed income traders are said to be unhappy with their bonuses. Poor compensation is one reason for recent exits, according to headhunters.

7. Pay at Morgan Stanley’s Institutional Securities business 

Pay her head for 2013: Not given.

Bonus pool for 2013: Not given.

Structure of bonuses for 2013: Morgan Stanley is said to be paying a higher proportion of senior bankers’ pay in cash. Nonetheless, Bloomberg reports that the bank will defer 50% of all bonuses between $50k-$100k and that employees with a bonus of more than $500k will only get 2% of their bonuses upfront. Bonuses are deferred over three years.

CRD IV changes: Not clear.

Happiness index: Unhappiness. Headhunters say Morgan Stanley’s fixed income salespeople and traders seem unhappy with their compensation, again.

8. Pay at UBS’s investment bank

Pay her head for 2013: CHF343k ($383k), up 3% on 2012.

Bonus pool for 2013: CHF3.2bn ($3.5bn) across the bank, up from CHF2.5bn in 2012.

Structure of bonuses for 2013: Senior staff expected to receive bonuses in contingent capital that will be wiped out if capital levels fall below 7% (as at Credit Suisse). Last year, UBS introduced bonuses for senior staff which vest over a five year period.  However, a presentation accompanying UBS’s fourth quarter results suggests 88% of UBS’s 2013 bonuses will have vested by the end of 2016. 

CRD IV changes:  UBS preemptively hiked some salaries for senior bankers in May 2013. At that time, salaries rose by a maximum of 15%.

Happiness index: Smug, particularly in relation to Credit Suisse.

 

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