Banks are struggling to curb rising costs as shutdowns caused by
the pandemic have put millions out of work, and forced banks to
add billions to reserves in case consumers or business customers
default on loans.
These costs are likely to hurt employee incentives, like
bonuses, despite the recent rebound in U.S. equities markets,
according to the report, which is closely watched by financial
professionals.
Only traders and investment bankers who work in underwriting are
likely to receive bigger bonuses in 2020, compared with 2019,
according to the report.
Underwriters have been in high demand since March as
corporations rushed to raise money during the pandemic, and
traders have been handling record-high volumes of transactions
as investors looked for opportunities in the volatile markets.
Conversely, workers in hedge funds, asset management, private
equity and retail and commercial banking should expect
incentives to shrink by as much as 30%, according to the report.
Layoffs could begin at traditional asset management firms and
investment and commercial banking divisions later this year or
in early 2021, as banks struggle to make a profit as the
pandemic suppressed client activity and threatens to cause loan
defaults.
Alan Johnson, author of the report, has said that layoffs this
year could be significant. Companies were forced to make quick
decisions and cut red tape during the pandemic, and they have
recognized fewer employees are needed to do certain jobs,
Johnson said.
(Reporting By Elizabeth Dilts Marshall; Editing by Steve
Orlofsky)
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