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Bank by bank: who’s got the least punitive bonus reforms?

On the slight chance that you may be able to leave your current employer and work for a rival with a less onerous approach towards bonus reform, which banks are being the least harsh? Here’s our ranking, with the most favourable at the top.

1). JPMorgan: While other banks are talking about clawbacks and very long deferrals, JPMorgan remains relatively unrepentant on current bonus structures. Little has been said publicly on bonus reform at JPM, and last week Jamie Dimon defended bonuses for hard jobs, comparing running a bank in the current climate to ‘Vietnam.’ As one of the banks that’s received TARP money, JPMorgan is confined to paying no more than $500k in cash to its ‘senior executives.’

2). Goldman Sachs: Yesterday, Lloyd Blankfein wrote an op-ed in the Financial Times. He called for an increase in the equity portion of deferred bonuses, for the evaluation of performance over time, for chief executives to be required to retain most of the equity they receive until retirement, and for equity delivery schedules to continue vesting after individuals have left the firm. However, with the exception of increased equity, there is little sign that any of this is currently in place at GS. Moreover, Goldman is helping its bankers out by easing the rules on restricted stock. TARP restrictions apply.

3) French banks: Individual French banks have been tight lipped over bonus reform plans. Yesterday, however, they signed up en masse to a new code of honneur ethics agreeing to limit bonuses, peg them to long term performance rather than short term profit, pay more stock, and eliminate guarantees for any non-key staff. None of this looks too onerous at first sight.

4). Barclays Capital: It emerged today that BarCap has introduced a more ponderous deferred compensation regime, under which its bankers will receive compensation in three stages – 50% up front, followed by two further payments of 25% each over the next 24 months. The good news is that there are no clawbacks and interest of 10% will be paid on the deferred portion.

5). Bank of America: Like BarCap, BofA has introduced a deferred comp scheme. Called the Additional Principal Programme, this apparently involves placing 70% of the bonus pool into a deferred regime, under which the first third will be paid out in quarterly payments this year, followed by the second and final thirds in 2011 and 2012. The remaining 30% will go into an equity deferral plan vesting over the next three years. TARP restrictions apply.

6). Citigroup: Around 25% of Citigroup bonuses are said to have been paid in the form of cash and shares paid out over the next four years. This compares favourably to the institutions listed above. But Citi is also said to be imposing clawbacks, which doesn’t. TARP restrictions apply.

7). Dresdner Kleinwort Commerzbank: Ok, Dredsdner doesn’t exist any more and Commerzbank’s commitment to UK investment banking is suspect, but it’s worth sparing a thought for what’s coming to pass at the former DKW. Bankers at the firm were told their bonus numbers last year, but someone apparently came up with the cunning plan of making them contingent on the bank’s performance until the payment date. DKW bankersr are also alleging that Commerz is reneging on guarantees.

8). UBS: It’s not pretty at UBS either. The bonus pool at the investment bank is down 85%, and some MDs and SVPs/directors have apparently been told they’ll they receive no bonus this year followed by 100% stock bonuses in 2010, vesting over three years. UBS has also introduced clawback or malus provisions, allowing it to refrain from paying that stock if the bank incurs a loss during the vesting period.

9). RBS: As things stand, RBS is one of worst of the lot. No one anywhere in the bank can receive more than 25k in cash.

10). Credit Suisse: The least appealing programme of all – unless the CDO market makes a comeback. Credit Suisse is paying 70-80% of all bonuses for directors and MDs out of its stash of toxic assets. Recipients will be exposed to the first 15% of any losses and payments will only start after five years. In the meantime, recipients will receive a dividend of 2.5% over LIBOR, which is repayable if they try to escape. The only upside will come if the toxic assets are priced so low that they’ve appreciated in value in five years’ time. Many CS bankers may not hang around to find out.

Comments (35)

  1. Where the hell is Deutsche Bank?

  2. It’s not on there.

  3. Well it should be. Today’s the day and I got UP on last year. Deferred cash rules not too bad either.

  4. what’s hapenning at HSBC? They get bonus details tomorrow I believe

  5. fx trader , you work in the one area which faces no bonus reduction and very little redundancy. Bravo.

  6. Where’s DB on here?

  7. Guiseppe, there’s a good reason I chose FX over the mountains of morons from my cohort who were “ooh, ooh, I so want to be a CDO structurer!!”

  8. What about Standard Chartered? Come on, i’ve been used to a more thorough job from efc.com…

  9. fx trader – anyone can trade fx flow, my granny could do it successfully and get your total comp + 25%, esp with d banks market share in fx…of course your tc was up on the year…cdo guys are only morons with hindsight, bet you want to be one them 3 years ago rather than just fx…

  10. As we, unfortunately, don’t have a large newsroom, we haven’t included every single every bank on this list – just some of the main ones. Nomura, Standard Chartered, ING, RBC etc could all have been covered, but we had to draw a line somewhere. Deutsche should have been included and will be added in (somewhere near the top).

    Sarah, Editor, eFinancialCareers Reply
  11. Hoi chaps. Something regarding not being able to see the wood for the trees springs to mind.

    We’re entering a period where Glass-Steagall will be re-enacted in some form, Governments will be taking 50%+ stakes in their own economies’ GDP, global trade will contract and barriers to that trade will start springing up. The cycle which began with Friedman/Reagan/Thatcher is coming to an end, and you lot think you can somehow keep your heads down for two years and everything will go back to normal. I got one word for you lot – Keynesianism. Welcome to Back to the Future Part 1. The real world.

    Hah – it actually makes me laugh to think how deluded you all are x

  12. DB announced today …varies by region but for M&A, down 30% to 40% in London with horrible deferred program, kicking in above GBP150k …other regions its down 70% with really nasty deferred program kicking in for anything above GBP50k
    Probably one of the worst on the street

  13. Deutsche Bank today paid the first 100k in pure cash. Sounds good to me!

    Happy Ops Girl Reply
  14. French banks paid crap. They always do anyway. You’ll never make $$$ there.

  15. Thanks Sarah. You can tell “DB worker” above is lying because M&A weren’t announced today, they get paid in summer. The cut-off was 100k, not 50k. Variant numbers but MDs down 80%+, some younger (Analyst, Assoc, VP) marginally up, at worst down 50%. Deferred cash portions above 100k.

  16. happy ops girl – who in there right mind is going to pay a settlements gimp 100k. Get a life and a brain test. Stupid stupid girl. You imbosil.

    slatinghappyopsgirl Reply
  17. It’s imbecile you imbecile.

  18. If happy ops stands for operations… 100k??

  19. I would much rather prefer the Credit Suisse option – there is so much more upside in it. If you are a CDO expert, you’d know that.

  20. What kind of sad excuse for humanity posts messages like that about someone they don’t even know: ” who in there right mind is going to pay a settlements gimp 100k. Get a life and a brain test. Stupid stupid girl. You imbosil”. Pretty sure that with that level of personal charm (not to mention that level of command of the english language), they’ll be pretty high on the next cost-cutting hit list.

    Slatingslatinghappyopsgirl Reply
  21. You’ve missed out Bank of Scotland with zero bonus to apply to all in its Corporate Division. Sacked Board members excepted of course with 4.5m of payouts.

    stuffed of edinburgh Reply
  22. this is just bad, real real bad, whats the point in working in banks anymore im thinking

  23. I got the big bubkuss, nada,zilch.
    I am in IT Deutsche Bank.

  24. I am in IT at Deutsche Bank, got a 25% bonus and promoted but no pay rise (so basically not promoted). I must be the cheapest ‘ASSociate’ in the bank…

  25. Guys you missed my point – the first 100k was pure cash. I got less than 100k obviously, but it was thus pure cash, no strings attached!!

    Happy Ops Girl Reply
  26. Yep thats right… Deutsche announced today.
    Deferred over 100k, bonuses down c. 50% on average in Global Markets… but given that ‘producing’ VPs in my area made a cool 600k sterling last year, I am not complaining. I’ll get by thank you very much
    (the salary freeze was mean-spirited though~!!)

    Structurer – VP Reply
  27. No bonus? You’re lucky. Greed kills.

  28. What about HSBC

  29. How much did you get Happy Ops Girl? Out of interest ;-)

  30. urbanPiglet – How did u hear that HSBC get details today?

  31. FX Trader – M&A for Associates and up pays in Feb as well. I had to pay my people. And didn’t like it. Are you on Jason’s team by any chance? Because you did well, given the market!

  32. RBS bonuses wont be announced until early march and the 25k cap was a wish from liberal rag in the UK.. The details that all the “french banks” signing some code of ethics is not true either. All banks will pay what they think they need to retain talent in businesses they deem important fullstop.

  33. @VP structurer: are you kidding… this is MD bonus that… can i ask which area you are structuring in? not equity i hope considering how they did there

  34. Re: No7: A messy lawsuit looks likely if Dresdner Kleinwort employees are denied their 2008 bonus pool of €400m. An article out this weekend in Germany says they have a transcript of promises made before the entire company in September that the retention pool was a “minimum” and could be exceeded potentially. They may need that in a legal battle!!

  35. fxtrader who the hell are you? who gives a toss about up this year vs last year, it’s about how much you get vs your P&L. DB did not look after me on that front and I thought the deferral stinks.

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