"Worst Payouts Since The Financial Crisis": Asia's Investment Bankers See Pay Cuts Up To 70%

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by Tyler Durden
Thursday, Feb 02, 2023 - 03:25 AM

It's a story we have been covering since before last year's holidays. After a tough 2022 for dealmaking, banker pay continues to get cut. The rollbacks continued this week with some top investment bankers in Asia ex-Japan are "having their worst payouts since the financial crisis", according to a new report from Bloomberg.

The report says that managing directors at banks like Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. will see their total compensation fall by 40% to 50%. Payouts for senior managing directors will total between $800,000 to $1.5 million. First year MDs will see bonuses of $600,000 to $1 million, the report says. 

High performers may only see cuts of 20% or less, with some of them still taking home about $2 million, the report says. But those who underperformed are seeing cuts of up to 60% to 70%. Some are also being "left out altogether" from bonus pools. 

Banking in China was hit particularly hard in 2022 thanks to Beijing's prior stance on Covid, which kept a majority of the country locked down. Deals slumped 88% after the government limited the ability by domestic companies to sell shares overseas, the report says. Investment banking revenue was down about 50% at the largest banks last year. 

Recall just days ago we reported that Bank of America had cut bonuses for its dealmakers by about 30% this year. Bonuses were also cut in equity capital markets and leveraged finance, with some bonuses down by as much as 50%, the report says.

We also noted last week that Deutsche was the latest to cut its investment banking bonuses by 40%. 

Credit Suisse Group AG Chairman Axel Lehmann also made a statement last week warning about lower bonuses after what he called a "horrifying year". Recall we wrote days ago that the bank had come out and was considering a large cut to its bonus pool. It was considering a 50% cut to its bonus pool, Bloomberg reported last week. 

Credit Suisse and J.P. Morgan join a number of Wall Street banks who laid off employees, cut bonuses or both after a torrid 2022. Goldman Sachs, for example, is set to lay off up to 4,000 employees, we noted last month. The bank was also "considering shrinking the bonus pool for its more than 3,000 investment bankers by at least 40 per cent this year".

Also in mid-December, we wrote that Ernst and Young would be cutting its bonuses entirely. The company held an "all hands" meeting two weeks ago where it delivered the news to its employees. The company is in the midst of splitting its audit business from a tax and advisory business heading into 2023. Morgan Stanley's Asia banker bonuses were also at risk by as much as 50%, we wrote days before that. In December, we also noted that Jefferies was considering slashing bonuses.