Bankers at Deutsche and BarCap should learn their bonuses this week. Early indications are concerning: both banks are alleged to be plotting punitive cash caps.
Headhunters say BarCap is rumoured to be contemplating a £60k cash cap. And Deutsche is rumoured to be deferring 70% of compensation above a mere €50k (£41k).
We’ve been here before. There are also cash caps this year at Morgan Stanley and Credit Suisse, where cash payments are limited to $125k (£79k) and $152k (£97k) respectively.
Meanwhile, Bank of America reportedly has a cash cap of $100k, beyond which a proportion of this year’s bonus is allocated to stock deferred until mid-February (ie. effectively cash) and a proportion is allocated to stock deferred over three years. However, the cash cap at BAML may be slightly meaningless -according to one headhunter, a lot of the deferred portion is vesting in mid-February. "We've seen one BAML guy on $300k who's been paid 20% cash, 60% stock that vests in February 2012, and another 20% stock that vests over three years.
"He's effectively getting 80% cash this year," the headhunter points out.
Neither BarCap nor Deutsche immediately responded to calls about their alleged caps. The head of one search boutique claims Deutsche’s especially punitive alleged cap is expected. “One of their MDs indicated they were planning a very low cap a few weeks ago,” he claims. “The feeling is that they’re making fewer redundancies than anyone else and should be able to get away with it.”
If the rumours about Deutsche’s structure are correct and its deferred compensation is held over three years, it could provoke widespread disgruntlement. Last year, Credit Suisse deferred a large proportion of junior bonuses and was forced to reverse the policy this year after people threatened to leave.