When McLagan speak about investment banking pay, it's worth taking note. Compensation benchmarking specialists, they work with leading investment banks to help determine whether they're paying people appropriately. McLagan's findings are, usually, strictly confidential.
Now, however, McLagan has participated in a study with the Association for Financial Markets in Europe. And the results are public. They tell a tale about as depressing as that told by the CEBR: investment banking pay is falling. It is falling a lot. Here, in bullet points, are the sorriest points.
This was more than risk-weighted profitability, which fell 28%.
Bonuses are falling far more quickly than revenues or profitability. Aggregate revenue and risk weighted profitability were down a mere 3% and 15% respectively over the same period.
They will rise a lot more if the European Union's proposal to cap bonuses at 100% of salaries comes into effect.
The cost of capital is affecting bonuses, says McLagan. To whit: