Morgan Stanley and Credit Suisse's M&A bankers out-performed the market in 2016, but - Credit Suisse's Asian investment bankers aside - they don't seem to be getting much thanks for it.
As the chart below shows, revenues in Morgan Stanley and Credit Suisse's M&A businesses globally rose by 13% last year. Everywhere else, they fell.
Even so, Morgan Stanley's M&A bonus pool has been heavily depleted. Headhunters in London confirm earlier reports that the bank's M&A bonus pool is down by 15% on last year. Morgan Stanley's equities traders are held responsible: revenues in the equities business fell 3% and M&A bonuses have allegedly been diverted in the cause of cross-subsidization.
Morgan Stanley trimmed equities salespeople and traders and senior investment bankers in January. London headhunters say that Morgan Stanley's remaining M&A bankers are "grunting" about their misfortune rather than rushing for roles elsewhere. "This wasn't particularly disastrous when you compare it to European houses like Deutsche," says one M&A headhunter. "Banks are just taking the view that they don't particularly need to pay people any more and people are having to accept that."
Credit Suisse, meanwhile, is paying its Asian investment bankers 15% to 20% more in bonuses than before, but headhunters say London M&A teams at the Swiss bank are being trimmed. Analysts and associates at the Swiss bank are reportedly being cut this week, before bonuses are announced at the end of this month. UBS has also been trimming its London investment banking team: William Barter, co-head of the UK investment bank, is understood to have left.
U.S. M&A teams appear better placed in this year's bonus round. Jeanne Branthover, managing partner in DHR International's global financial services business, says M&A bonuses on Wall Street have held up better than in London: "When we talk to our clients, their focus is on building in the U.S. or in Asia this year," she says.