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Wall Street banks’ workforce to double this year after bonus payments – experts

FILE PHOTO: A man walks down Wall Street in New York
FILE PHOTO: A man walks down Wall Street in New York, September 18, 2008. REUTERS/Eric Thayer/File Photo

March 14, 2022

By Elizabeth Dilts Marshall

NEW YORK (Reuters) – Wall Street staff turnover is expected to rise sharply in the coming weeks as investment bankers who have held back from job hunting during the pandemic cash their record bonus checks and seek new opportunities in the red-hot job market, recruiters said.

Bonuses have risen an average of 20% to 25% on Wall Street thanks to last year’s deal-making frenzy, but bankers have been waiting for the checks to hit their accounts — which usually happens between January and January of each year March happened – to jump off.

While bonus payments usually trigger staff turnover, recruiters and experts say 2022 could see double the normal rate of churn due to a confluence of factors: Many bankers felt it was too risky to change jobs during the COVID-19 pandemic and are then burned out grueling hours working on last year’s deal bonanza.

The tight US job market has also created tremendous opportunities for bankers and pushed up salaries.

“We’ve been telling our clients for over a year that they will have a ‘double year’ in terms of revenue in 2022,” said Alan Johnson, managing director of Johnson Associates, a Wall Street compensation consultancy.

“You get two years of people who wanted to quit.”

Goldman Sachs Group Inc and JPMorgan Chase paid bump bonuses for 2021, with Goldman increasing the performance bonus for top-performing bankers by 40% to 50% and JPMorgan by 30% to 40%, Reuters reported.

Morgan Stanley increased that number by more than 20%. Overall, bonuses increased by an average of 20% to 25% in 2021, Johnson Associates estimated.

That jump was largely thanks to U.S. deal volume, which Dealogic said almost doubled to $2.61 trillion in 2021 as companies rushed to raise capital and used record stock prices to make acquisitions.

Market volatility this year, exacerbated by Russia’s invasion of Ukraine, has weighed on deals in general and dampened CEO sentiment towards companies’ IPOs. With the chances of big bonuses slimming down for 2022, some investment bankers have little incentive to stay in their current roles, the recruiters added.

This is especially true for workers who may be considering non-banking jobs, such as in Silicon Valley, where many former finance executives have found lucrative opportunities.

PAIN FOR SOME, GAIN FOR OTHERS

The pain will be felt most from banks whose employees believe they were paid less than their peers, said a New York-based recruiter who places analysts and employees.

These junior bankers, who back veteran dealmakers, were quick to circulate complaints on social media about their pay and working conditions, including working over 100 hours a week, and pressured Wall Street employers to increase their pay.

Citigroup and Credit Suisse are two banks likely to suffer, said the recruiter, who asked not to be named as he discussed sensitive pay issues.

Litquidity, a popular Instagram and Twitter account run by an anonymous financial services firm, published comments from first-year analysts at Citigroup in late January complaining that their bonuses for 2021 were “significantly lower” than that of competing banks.

Citigroup declined to comment.

Meanwhile, scandal-hit Swiss lender Credit Suisse was so concerned about retaining top talent that it increased immediate cash payouts for experienced bankers provided they stayed three years.

Credit Suisse declined to comment, although the bank recently hired some senior investment bankers.

“The banks that have not paid above average will lose a lot of talent and will probably have trouble recruiting new talent,” the recruiter said, adding that some young bankers are now starting their job hunt after just six months in their current role.

However, sales work both ways, experts and executives said.

“This is recruiting moment,” said Marc Cooper, CEO of boutique investment bank Solomon Partners. “We have a lot of offers out there, we’ll see what happens.”

(Reporting by Elizabeth Dilts Marshall; Additional reporting by David French; Editing by Michelle Price and Andrea Ricci)

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DUSTIN JONES

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