Wall Street’s Biggest Banks Cut Annual Bonuses by 30-40%

According to The Wall Street Journal, leading US banks are forced to reduce annual bonuses due to lower revenues from investment banking and trading operations. The decrease in revenue occurred against the backdrop of a general decline in the stock market, new placements of shares and bonds. According to Dealogic’s calculations, the largest banks’ combined revenue from securities placement fees and intermediary services for mergers and acquisitions fell by about $50 billion in the past year.

With reference to sources in banks, WSJ reports that JP Morgan Chase, Bank of America, Citigroup and Jefferies Financial Group have reduced the bonus pool by 30%, and by 40% at Goldman Sachs investment bank. Goldman Sachs CEO David Solomon also declared, that against the backdrop of falling revenue, the bank may reduce its workforce as early as the beginning of next year. US media sources suggest that the reduction may affect 8% of the investment bank’s staff, or about 4,000 employees.

The least affected on Wall Street is expected to be employees of the currency and fixed income units (government bonds, etc.). The proceeds from these operations have decreased by 10-15% this year, so the bonuses will also be reduced by about the same amount.

There is no data yet on how much bonuses on Wall Street will be this year. Last year, the New York State Accounting Office calculated that the average annual bonus for employees who deal in securities at major U.S. banks made up a record $257.5 thousand. If the reduction this year is 30%, the average annual bonus may not reach the mark of $200 thousand and amount to about $180 thousand.

Evgeniy Khvostik