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Wall Street bankers expecting big things come bonus season

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What a difference a year makes. Last autumn, U.S. bankers were, on the whole, rather pessimistic about their chances of taking home a big bonus, especially compared to their counterparts in London. Their eyes are much wider this year.

More than three out of four U.S. bankers (76%) expect to receive a bonus for 2014, up from 59% a year ago, according to the eFinancialCareers Bonus Expectation Survey. Moreover, around 56% are anticipating receiving a bigger bonus this year than they did in 2013, up from 42% a year ago. Of those who expect a bump in incentivized comp, nearly 75% believe they’ll see a double-digit increase.

Only 14% of respondents said they don’t expect a bonus, but nearly half of those people (46%) said their position isn’t bonus eligible or that their company doesn’t issue bonuses.

Plus, cash seems to be back in vogue, at least compared to a year ago. Roughly 45% of the 978 U.S. respondents expect the cash component of their bonus to increase this year. Only 13% believe it’ll be lower.

Now that’s not to say all parties are equal. Banks are doing more to take care of junior workers than they did in years’ past, both in terms of work-life balance and their checking account.

At the analyst level, bonuses are up $5-10k, said Adam Zoia, chief executive of Wall Street headhunting firm Glocap. However, the trend of rewarding high performers more substantially than others, as opposed to a more uniform bonus pay structure for juniors, is continuing, he said.

Compensation (and hiring) should be even stronger at the post-MBA associate level, Zoia added, due to the dearth of available, high quality candidates.

As far as sectors, M&A is the place to be, especially at the senior level, Zoia said. The bonus pool for M&A bankers should increase as much as 15% this year, according to compensation consultant Johnson Associates. Fixed income traders are set up to be the biggest losers, facing as much as a 15% drop in year-end compensation, although the volatility in September helped mend some fences.

Base pay

While all the bonus talk is simply prospecting, bankers confirm their employers are now back to giving raises in base pay. Around 60% of respondents reported receiving a raise over the last 12 months, with less than 1% saying they received a reduction in base pay. Half expect another raise in the next six months.

Likely, it’s again the juniors who are enjoying the spoils. Goldman Sachs, Bank of America, J.P. Morgan and other banks across the Street announced that they’re increasing salaries by as much as 20% for analysts and associates within their investment bank.

Wall Street’s hand has been forced a bit as young talent has increasingly chosen other industries like tech and consulting over banking, due to similar pay structures and more bearable hours. Banks have also made efforts on work-life balance, banning Saturday work and telling senior bankers to scale back last-minute assignments. The reviews on the efforts have been mixed.

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