US and European bankers working in the City were stung by sterling’s decline in the last bonus round.
Between October 1st 2008 and February 2009, the pound declined around 25%, thereby depleting already reduced bonuses for City-based bankers looking to convert payouts into overseas currencies.
Most banks run currency mitigation schemes allowing employees to hedge against exchange rate changes by buying the option to purchase currency at a favourable rate early in the year. The problem this year came with overseas employees who didn’t buy into the mitigation schemes.
According to headhunters, banks like Goldman and JPMorgan helped some of these people out by allowing them to convert sterling bonuses at more favourable exchange rates.
Banks like Citi and Credit Suisse were said to be uncomprising, however. “Management weren’t lenient if you didn’t have the fix. In bull market times managers were more often able to negotiate better rates for their people,” says a partner at one search firm.