Amid the spate of predictions of solid bonus increases, Armstrong International's survey of expectations in London is like a splash of cold water. While it predicts the total bonus pool will rise between 10 and 30 percent this year, the firm says plenty of people will be surprised to discover they're being paid the same money as last year - or less.
With no one knowing where markets will go next, Armstrong Partner Matthew Osborne says firms will focus on rewarding top performers. "Banks are determined to secure their best talent now," he says. "If there's a slowdown toward the end of next year, they know they need to have the best guys on board."
Osborne sees corporate financiers and structured product specialists gaining the most rewards, simply because of the strength of those markets. For example, top performing structured credit traders are forecast to take home $2 to $3 million, particularly in high margin products like constant proportion portfolio insurance (CPPI), hybrid products and collateralized debt obligations of asset-backed securities.
If tears are to be shed, Armstrong's study suggests they'll flow among mid-ranking staffers on teams selling interest rate products to hedge funds. Although associates here are likely to be paid up, the firm predicts VPs on interest rate teams could see their pay down 20 percent. If things don't buck up next year, they may be reassigned elsewhere.
More from the survey's below. Read it and weep. Or not.
Armstrong International's 2006 Bonus Report
Correlation credit traders: $1million +
Junior structurers:: $700,000
Debt Capital Markets
Director-level originators: $500,000 to $1 million
Managing directors (without significant management responsibility): $1.2 - $1.5 million
Interest Rate Derivative Sales to Hedge Funds
Managing directors: $2 - $3 million
Top managing directors: $1 million+
Vice presidents: $500,000
Managing directors: $1 million - $3 million
Directors: $1.5 million for overperformers, $1.2 - $1. 3 million for others
Source: Armstrong International