Payday is approaching: Bankers are waving huge bonuses


Payday is approaching
Big bonuses await bankers

After the lean Corona year, profits are gushing again at the financial institutions. The investment bankers should share in the success with bonuses and salary increases. Above all, the financial institutions in the USA are digging deep into their pockets. This has met with criticism in London. The financial blessing is not only “questionable” from a moral point of view.

Investment bankers in European financial institutions can look forward to fat bonus payments again after the lean Corona year 2020. A wave of takeovers and IPOs is rolling in, profits are gushing up again at the institutes – and the stressed bankers want to get their share of that. If they want to keep their staff, the banks have to dig deep into their pockets.

“The banks know that they have to put something on the table in the next bonus round,” says Sophie Scholes, who is responsible for the financial sector in Great Britain at Heidrick & Struggles. Bonuses and salary increases are therefore likely to rise in the second half of the year. Two factors were important: “One is the sheer competition for talent, that is, you want to keep good people.” On the other hand, it is clear to the banks that the bankers have achieved a lot and have landed further coveted orders.

The British banks in particular are trying to keep up with Americans and Asians, where the bonus pots are traditionally larger than in Europe. The British bank Barclays increased the total bonus volume by 46 percent to 1.1 billion pounds, HSBC added 900 million pounds in the first half of the year. Standard Chartered justified an eight percent increase in costs with a “normalization of performance-based pay”. At Deutsche Bank, salaries and bonuses in investment banking have increased by six percent.

Compared to the US houses that is little: At Goldman Sachs, the compensation rose by 3.5 billion dollars compared to the previous year, at rival JPMorgan by two billion dollars. Bankers have not been so much sought after for more than a decade, say managers and HR officers. After all, in view of the economic upturn, the wave of mergers that is rolling in, or the hot business with IPOs of empty company cloaks (SPAC), they are as busy as they have been for a long time.

This also affects the next generation: Goldman Sachs raised the salary for junior investment bankers to $ 110,000 in the first year, HSBC followed suit and is now offering newly hired analysts in the US $ 100,000. At a time when college graduates are paying more attention to their “work-life balance”, it is becoming increasingly difficult to get young bankers to work 80 hours or more per week in order to get to the top.

Struggle for bonus caps for London bankers

In London, banks often can’t keep up with bonuses. Because in Great Britain there is an upper limit for such extras: a maximum of twice the basic salary is in it. According to media reports, the British banks want to lift the cap in talks with politicians. Simon Youel from the “Positive Money” advocacy group is strongly against it: “Paying huge bonuses at a time when companies and households are struggling and the economic outlook is so uncertain is not only morally questionable, but also economically irresponsible.” After all, the banks also earned so well because the state supported the economy.

Bank managers try to justify themselves, but also know that the image of the money house could suffer from a bonus debate. Barclays boss Jes Staley points out that investment bankers earned less when times were bad so banks could keep their returns. “We have to reward the people,” said the chief executive of a British bank, who did not want to be named. “People had a difficult time.” Anyone who has worked from home for a year now wants something from it.

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