Credit Suisse First Boston bankers will receive bigger bonuses than they expected after the bank promised to increase the bonus pool in its investment banking division in line with rivals - even though CSFB failed to keep up with them last year.
At a meeting last week in New York, Brian Finn, president of CSFB, told investment bankers that the bonus pool would be increased this year in line with the rest of Wall Street, according to a senior source in the division.
Many bankers in the advisory and capital markets teams had not been expecting an increase in bonuses after investment banking revenues fell 1% in the first nine months of last year. This was a result of a poor performance in mergers and acquisitions, where revenues fell 17%.
In contrast, investment banking revenues at Morgan Stanley jumped 44% and by 24% at Goldman Sachs in 2004. CSFB is keen to retain its best bankers to achieve its plans to double profits within three years, which it announced last month. Finn is understood to have stressed, however, that bonuses would be based on individual and team performance.
Bankers at Goldman Sachs, Morgan Stanley and Lehman Brothers have been told their bonuses for 2004. It is understood CSFB will announce its payouts by the end of the month and pay them in mid-February.
This latest incentive comes on top of a recent decision to raise the stock component of bonuses for CSFB staff earning more than $350,000 (€266,000). It is also working on a phantom stock plan in an attempt to recreate the ownership culture of other Wall Street banks.
A spokesman for CSFB declined to comment on compensation.
One analyst, who covers European banks, said Neil Moskowitz, chief financial officer at CSFB, had made it clear last month that the bank would not disappoint its staff on bonuses to avoid unnecessary departures. CSFB has said it will lay off about 300 staff early this year.