Bonuses in 2016 will be a dirty word. Most banks are cracking down on compensation, Deutsche Bank and Credit Suisse will likely make deep cuts to variable comp and bonuses will be flat at best. Fixed income will, predictably, be most adversely affected and only M&A bankers could see a significant uplift.
But that’s a global view. Looking at London specifically, salary benchmarking website Emolument.com says equities traders at associate level could see their bonuses increase the most this year compared to last.
Bonuses for junior equities traders will average out at £31k for 2015/2016, it suggests, an increase of 3.3% on last year. Emolument says equities salespeople and traders are likely to be in the only business benefiting from increased bonuses across the board. Unfortunately, these increases will be comparatively small - that 3.3% hike in bonuses equates to just £1k per head for juniors.
Emolument predicts that the biggest decreases will be across FICC, with VPs worst hit with a predicted 9.4% drop on last year. Even investment bankers in London will receive less, the figures suggest.
It should be noted, however, that the predictions are not without flaws. By bundling M&A bankers (who've done well) together with the equity and debt capital markets bankers (who haven't), Emolument paints an unduly negative picture for IBD. M&A bankers are still likely to get paid - respected compensation consultancy Johnson Associates is anticipating a 20% increase in M&A bonus payments this year.