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Bonuses are up 20% to 25% on average across Wall Street thanks
to last year's deal-making frenzy, but bankers have been waiting
for the checks to hit their accounts -- which typically happens
each year between January and March -- to jump ship.
While bonus payouts usually trigger staff turnover, recruiters
and experts say 2022 could see twice as much churn as usual due
to a confluence of factors: many bankers felt it was too risky
to job hop during the COVID-19 pandemic and are now burnt out
after working grueling hours on last year's deal bonanza.
The tight U.S. labor market has also created huge opportunities
for bankers and pushed up salaries.
"We have been telling our clients for over a year now that they
would have a 'double year' in 2022 in terms of turnover," said
Alan Johnson, managing director of Johnson Associates, a Wall
Street compensation consultancy.
"You're getting two years' worth of people who wanted to quit."
Goldman Sachs Group Inc and JPMorgan Chase paid bumper bonuses
for 2021, with Goldman increasing top-performing bankers'
incentive compensation by 40% to 50% and JPMorgan by 30% to 40%,
Reuters reported.
Morgan Stanley raised that figure by more than 20%. Overall,
2021 bonuses on average rose by 20%-25%, Johnson Associates
estimated.
That jump was largely thanks to U.S. deal volumes nearly
doubling to $2.61 trillion in 2021, according to Dealogic, as
corporations rushed to raise funds and take advantage of record
share prices to snap up acquisitions.
Market volatility this year, which has been compounded by
Russia's invasion of Ukraine, has weighed on dealmaking
generally and dampened CEO sentiment toward taking companies
public. With chances for big 2022 bonuses reduced, some
investment bankers have little incentive to stick with their
current roles, recruiters added.
This is especially true for workers who may be considering jobs
outside banking, 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 by banks whose staff believe they
were paid less than their peers, said one New York-based
recruiter who works placing analysts and associates.
Those junior bankers, who support senior dealmakers, have been
quick to circulate complaints about their pay and working
conditions, including 100-plus hour work weeks, on social media,
pressuring Wall Street employers to raise their compensation.
Citigroup and Credit Suisse are two banks likely to suffer, said
the recruiter who asked not to be named discussing sensitive pay
issues.
"Litquidity," a popular Instagram and Twitter account run by an
anonymous financial services worker, in late January posted
comments it said were from Citigroup first-year analysts
complaining their 2021 bonuses were "significantly lower" than
rival banks.
Citigroup declined to comment.
Scandal-hit Swiss lender Credit Suisse meanwhile was so worried
about retaining top talent that it boosted immediate cash
payouts for senior bankers, provided they stuck around for three
years.
Credit Suisse declined to comment, although the bank has
recently made some senior investment banking hires.
"The banks that didn't pay above average are going to lose a lot
of talent and are probably going to struggle to recruit new
talent," said the recruiter, adding that some junior bankers are
now beginning their job hunt just six months into their current
role.
However, turnover works both ways, experts and executives said.
"This is the recruiting moment," said Marc Cooper, chief
executive of the boutique investment bank Solomon Partners. "We
have plenty of offers out, 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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