Bonuses for 2016 will be worse than last year at global banks in Hong Kong, but money is still being ringfenced to reward top rainmakers.
“Bonus pools will be down 10% overall,” says Christian Brun, managing partner of search firm Wellesley Partners in Hong Kong.
US and European investment banks in Hong Kong are cutting senior jobs and reigning in costs in the face of competition from Chinese rivals who are undercutting their fees and beating them to mainland deals.
Western banks in the city won’t be trimming bonuses for their best dealmakers, though.
“If you have a targeted bonus and you met it, you will get paid as planned,” says Eunice Ng, director of headhunters Avanza Consulting in Hong Kong.
However, come the first quarter banks will be handing out more ‘zero’ bonuses to the expanding group of underperformers within their ranks.
“The bonus bands will be extreme this year,” adds Brun. “The top guys will be very well paid and in line with 2015. But many others will be on zero or close.”
“We’ll be seeing more ‘full zeros’ or ‘donuts’ this year – and once you get one of these, you know exactly where you stand,” says an investment banking headhunter in Hong Kong who asked not to be named.
“Bankers on zeros will leave, but banks will actually want them to. They’ll get no severance pay, so it’s cheaper than making them redundant,” he adds.
Some global banks in Hong Kong will be less affected by the overall downward bonus trend than others.
“Credit Suisse and Morgan Stanley have had great years in APAC,” points out Brun.
The firms ranked third and fifth respectively (or first and third when Chinese banks are excluded) for Asia ex-Japan investment banking revenue in the first nine months of the year, according to Dealogic figures.
Fourth placed J.P. Morgan will also out pay most of its rivals, says the anonymous headhunter.
“And JP and Goldman Sachs will pay about 75% of their bonuses in cash, a higher ratio than at the European firms,” he adds. “The Deutsche Bank guys in Hong Kong will get mostly stock, if anything. Everyone there says it’s going to be a car crash when it comes to their bonuses.”
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