- Wall Street banks are preparing to communicate 2022 compensation to staff.
- Cuts, layoffs, and falling profits have cast a pall over the usually festive occasion.
- Insider has compiled the dates each big bank will announce bonuses to employees.
Usually, the announcement of bonus checks is eagerly awaited across Wall Street. But this winter, bonus season will be marked with trepidation — a fitting cap to a 2022 many dealmakers would rather soon forget.
Starting this week, the nation’s biggest banks — from JPMorgan Chase to Goldman Sachs, Citi, Morgan Stanley, Bank of America, and Wells Fargo — will begin announcing year-end bonuses to employees.
But investment banking activity cratered last year following a pandemic-fueled glut of deals in 2021, and bankers across Wall Street are bracing for smaller bonuses to hit their accounts this January.
The Federal Reserve’s aggressive rate hikes that began last spring in the face of mounting inflation have touched nearly every corner of finance, contributing to a moribund debt market, a stagnant environment for initial public offerings, and lackluster merger-and-acquisition volumes.
According to deal-tracking firm Refinitiv, M&A activity fell by more than a third last year to roughly $3.5 trillion globally. But such a drop paled in comparison to the carnage in equity capital markets, where new IPO proceeds fell 65% through December 15 across just 1,300 new offerings, Refinitiv found.
Big bank sales and trading operations — especially desks focused on government bonds, currencies, and commodities — have been a bright spot, benefiting from the global market volatility to produce outsized gains. But it’s not expected to be enough to compensate for the dealmaking slowdown, and investment banks’ bruised bottom lines mean that even high-performing markets employees could be staring at underwhelming bonus checks relative to their performance.
The bonus slashing will be greater at some banks than others.
At Goldman Sachs, for example, Insider has reported that some executives see their compensation returning to levels last seen a decade ago, with a report from Semafor suggesting the bonus pool for partners could be cut in half this year. The bonus announcements come at a particularly inopportune time for Goldman, which is slated to lay off as many as 3,200 employees this week amid a broader reset in strategy under CEO David Solomon.
Insider spoke to people with knowledge of the bonus announcements at the big Wall Street banks to find out exactly when the news is expected. Bonus dates have been known to change at the last moment, but here’s when the top banks are expected to announce year-end compensation:
- Citi is expected to start communicating bonuses on January 12, one source familiar with the plans told Insider.
- Morgan Stanley is also expected to communicate bonuses on January 12, people with knowledge of the plans told Insider.
- JPMorgan Chase will begin to communicate bonuses on January 17, people with knowledge of the plans told Insider. Checks will begin to hit bank accounts the week of the 23rd, a person familiar with the plans said.
- Goldman Sachs will announce bonuses on January 18, a person familiar with the matter told Insider.
- Bank of America will communicate bonuses on January 25, a person with knowledge of the plans told Insider.
- Wells Fargo will communicate comp by the end of the month but doesn’t have a specific date to reveal employee pay, according to a person familiar with the bank’s plans.
Bonus payments tend to hit bank accounts a week or two after they are communicated. Representatives for each of the banks declined to comment.
Bankers will be hit hard this year, while trading could be a lone bright spot
Just like in recent years, bonus fortunes are expected to diverge greatly by division and desk.
Back in 2021, it was the bankers reaping a bonanza of rewards after a surge in dealmaking while fixed-income traders saw bonuses decline from their own banner year in 2020. This year, experts predict the opposite, with bonuses for fixed-income trading desks poised to eclipse those across investment banking teams.
Bonuses for some Wall Street teams could fall by as much as 45% industry-wide, according to a survey by compensation consultants Johnson Associates, Insider previously reported.
Underwriting and advisory teams will likely bear the brunt of the market slowdown. Debt and equity capital markets activity cratered in 2022 as companies put off issuing bonds and stock amid a volatile economic backdrop. Johnson Associates estimated that bonuses this year for underwriting and advisory businesses will fall 40% to 45% and 15% to 20%, respectively.
Trading desks, however, can expect to see some brighter figures. According to Johnson Associates, compensation for equities traders will likely remain flat this year, but fixed-income traders can expect to see their awards jump 15% to 20% relative to 2021.