Big Wall Street firms are reportedly preparing to cut year-end bonuses — a sharp about-face from lavish payouts handed out during the pandemic — as the industry braces for a major slowdown in deal-making.
Wall Street’s top banks — JPMorgan, Bank of America and Citi — plan to cut bonuses by 30 percent as the economy tightens and layoffs begin after more than two years of industry-wide talent shortages, according to a report.
Investment bankers are likely to take the biggest hit – with their bonuses set to drop by 50% in 2023, cutting banks’ profits by a third. Bloomberg reported on Friday. Some mid-level and lower-level financiers may receive no bonuses at all—a stinging blow, given that most Wall Street compensation often comes from bonuses.
It’s not just divisions facing smaller bonuses. At Goldman Sachs, traders are facing reduces their bonus money Although the global markets division will generate $25 billion in revenue in 2022, that’s a 15 percent increase in revenue from 2021, according to Bloomberg was reported separately on Friday.
Sales executives were told earlier this week that bonuses, which make up the bulk of their compensation, would be cut by a “low double-digit percentage,” the report added.
Some experts predict that bankers will eventually see bonuses drop by 45% as financiers face the looming recession, according to consulting firm Johnson Associates. It’s a reminder to everyone on Wall Street that the economy is in a much different state than last year, when Wall Street bonuses jumped 35%.
Many on Wall Street are grateful to keep their jobs. Employees at Goldman Sachs, Morgan Stanley and Well Fargo have been killed every year. Insiders fear the job cuts are just beginning.
As The Post reported Thursday, Morgan Stanley has finally managed to get its employees back to their desks five days a week, but under threat of layoffs. The Wall Street giant’s CEO, James Gorman, said separately on Thursday that the mega-bank was making “modest cuts around the world.”
Bank of America analyst Ibrahim Poonawala applauded the move to cut compensation in a note to clients: “Fortunately, David Solomon and his team saw the light, made changes, and you can see this decision contributing to the stock’s performance this quarter.” you should assume that .
Goldman Sachs, JPMorgan, Bank of America and Citi declined to comment.
It will be a disappointing bonus season for bankers used to eye-watering bonuses as the war for talent pushes salaries to new heights.
But the cuts come as no surprise to compensation professionals.
“Most Wall Street professionals are very disappointed and surprised when they get their year-end bonuses,” Johnson Associates managing director Alan Johnson told The Post last month. “For the traditional master of the universe … this will be a difficult year.”