Compensation consultant predicts pay boost for traders
Pay to continue falling at asset management firms
Bankers working in equity and fixed income will enjoy large pay rises this year with compensation set to increase by as much as 30%, a consultant has predicted, defying expectations that bankers will have to accept reduced pay during the economic downturn.
According to compensation consultants Johnson Associates, equities and fixed income employees working in sales and trading can expect anything between a 20% to 30% kicker in their total compensation this year compared to 2008, as a combination of strong customer flows and reduction in writedowns boosts pay.
However, it said the improvement in market conditions is unlikely to benefit staff working in the advisory and underwriting businesses of investment banks, where the bonus pool is expected to decrease by 15% to 20% this year while deal volumes remain low.
Nevertheless, Johnson Associates' sample of seven major investment and commercial banks forecasts an increase in the total staff bonus pool for five of the firms.
In contrast, its analysis of eight public asset management companies predicts a fall in pool for all the businesses. Lower assets under management will impact pay at fund management firms “considerably”, according to the report, while high-water marks at hedge funds and the difficulties of raising new money will also act as a constraint.
At investment banks the increase in pay comes off the low base set last year and Johnson Associates says that overall compensation levels will be down “significantly” on those recorded in 2007.
New York-based Johnson Associates is recognised as one of the world’s leading compensation consultants and though its latest report focuses on Wall Street banks the firm has frequently been used by European banks, with Credit Suisse hiring it last year to advise on changes to its pay structure.
-- Write to Harry Wilson at hwilson@efinancialnews.com
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