DCM bonus prospects wilt following Lehman results

Lehman Brothers' quarterly results have put a bit of a dampener on bonus prospects for debt capital markets bankers.

The bank's second quarter results, reported yesterday, revealed a 22% drop in its revenues from debt underwriting between the first and second quarters. By comparison, revenues from the more vibrant investment banking advisory area rose 8% during the same period.

Lee Thacker, a partner at search firm Highland Partners, said investment grade debt capital markets (DCM) bankers aren't having the best of years. "Last year was quite busy, given growth in the financial institutions business. But this year, most of the growth has been in the small area of hybrid capital issuance."

Thacker says DCM bankers will be lucky if this year's bonuses are equal to last year's. He says the best paid will be at the likes of Société Générale and Royal Bank of Scotland, which are building their debt capital markets businesses, and at Credit Suisse, Deutsche Bank, Citigroup and Barclays Capital, which rank high in the European DCM league tables.

"Unless you're working for one of the top five, it's difficult get paid in investment grade DCM," he says. "The income steams just don't justify it."