Bonuses are likely to rise again for some Wall Street bankers as a rebound in dealmaking in 2024 boosts profits at the country’s largest financial institutions.
The highest salaries are likely to go to bankers involved in bond and equity issuance, as well as to traders.
According to a new report from compensation consulting firm Johnson Associates, bond guarantors can likely look forward to a 25 to 35 percent increase in their bonuses, while those who help companies issue stock through initial public offerings can expect bonuses of 20 to 30 percent.
In equity sales and trading, bonuses are expected to rise by 10 to 15 percent compared to last year. For bond traders and asset and wealth managers, an increase of 5 to 10 percent is expected.
These increases, expected at the major Wall Street banks, would reverse two disappointing years in which there was no new business and bonuses fell.
According to Johnson Associates, bonuses at major banks fell 20 to 30 percent in 2022 and remained largely unchanged last year.
But this year, investment banking has rebounded. The six major banks with significant Wall Street operations – JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Wells Fargo (WFC) – all reported higher revenues in this business in the second quarter.
Shares of these six big banks are all up year-to-date. Goldman Sachs, JPMorgan, Bank of America and Citigroup have all outperformed an index that tracks the sector (^BKX), which was up 10% on Friday morning.
However, these companies’ businesses are not running at full speed in all areas – and this could affect the compensation of some bankers.
Those involved in mergers and acquisitions, for example, can expect premiums ranging from stagnant to up to 5 percent, according to Johnson Associates.
Due to tighter regulations on certain corporate mergers, interest rate developments and the US presidential election, uncertainty continues to prevail in this part of Wall Street.
Bankers who deal with the more traditional tasks of lending to businesses and private customers could also see lower bonuses. Their bonus payments are expected to remain unchanged or fall by five percent.
These more traditional bankers are grappling with a sustained industry-wide slump in lending at traditional banks and increased caution in commercial real estate transactions.
“The second half of the year could be more volatile and uncertain,” said the Johnson Associates report, citing weaker stock markets that could be a sign of an economic slowdown.
David Hollerith is a senior reporter for Yahoo Finance, covering banking, cryptocurrency, and other areas of finance.
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