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Morning Coffee: This explains why the coming bonus round will disappoint everyone. The most modest 52 year-old at Citi

2015 bonuses banking

The pot of gold at the end of the 2015 rainbow is spurious

Expecting a big bonus this year? Don’t. The Wall Street Journal has been talking to all sorts of anonymous people at all sorts of banks and their overall verdict is that you will be disappointed, even if you work in M&A.

FICC traders will, of course, fare the worst. At Morgan Stanley, the WSJ, says ‘people familiar with the matter’ are predicting a 20% drop in pay for fixed income currencies and commodities (FICC) professionals. A similar cut is reportedly coming at Citi, while FICC traders at Goldman and Bank of America are in line for cuts of 10%. At J.P. Morgan, bonuses will be “relatively flat,” although there will “some disparity” in J.P. Morgan’s trading bonuses, where there will be “greater discrepancies between strong and weak performers.”

M&A bankers might think their bonuses more bounteous this year, but they stand to be the most disappointed of the lot. At Bank of America, the WSJ says bonuses in IBD will fall by 5% to 10%. “Flat is the new up”, according to headhunters. The Financial Times helps explains why. Yes, M&A fees at top banks boomed in the first nine months of 2015, but they were equivalent to just one-tenth of revenues from sales and trading. In other words, 2015 may have been a great year for M&A, but M&A won’t save the bonus pool.

Separately, Citi’s Derek Bandeen is refreshingly understated. The WSJ has been talking to 52-year-old Bandeen about his plans for expanding Citi’s equities sales and trading business. “I’d like to be No. 1,” says Mr. Bandeen. “But I don’t think we’re going there any time soon.”

Bandeen’s modesty and realism are refreshing in finance. They might have something to do with the fact that Bandeen has already run Citi’s global equities business for more than seven years, during which time the WSJ points out that Citi has, “failed to pick up much market share against rivals.” While Bandeen might like Citi to be the market leader sometime in the future, for the moment he’s therefore set himself the more achievable goal of ranking in the top six. Right now, Citi ranks seventh. Goal setters have much to learn from Bandeen’s approach.

Meanwhile:

Technology people are leaving Silicon Valley and joining Citi. (Quartz) 

Lisa Rabbe, Credit Suisse’s head of public policy for Europe, the Middle East and Africa has left. (Financial News) 

Jes Staley will earn up to £8.25m ($12m) a year at Barclays. (Financial Times) 

Ex-Barclays CEO (pre-Diamond) has interim CEO wife who earns £8k ($11.6k) a day. (Sunday Times)

22 year-old Cambridge graduate with consulting job saves £2k a month. (Telegraph) 

What does and does not work if you are pulling an all-nighter. (WSO)

You are working hard because it is a pleasure that gives you meaning. (The Atlantic) 

Divorced tech entrepreneur with eclectic £3m house in Spitalfields, London, is looking for interesting house sharers to ‘pay what they can.’  (Sunday Times) 

I’ve spent four years as a professional poker player. Can I move into finance? (Reddit)



Photo credit: Lopsided Rainbow and a Pot of Gold by Lissa R is licensed under CC BY 2.0.

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