Who will get paid? And who won't?

14 November 2007

2 minute read

Headhunters Armstrong International and Options Group have both now unveiled their forecasts for 2007 bonuses. They're not entirely in agreement.

The top line

...is that bonuses will be down, down, down. According to Armstrong's report (which we haven't actually seen, but which is plastered all over the press this morning), the average banker will see his/her payout decline 20%. It predicts a higher proportion will be in shares, with UBS now said to be paying anything above $750k in stock.

Options Group is more upbeat, but remains downbeat - it says 2007 bonuses will fall 5-10%.

Almost certainly bigger bonuses for...

· Commodities pros - an increase of up to 20% (according to Armstrong via the Financial Times), and 15-20% according to Options Group.

· Wealth managers - either flat or an increase of up to 10% (according to Armstrong via the Telegraph). No predictions from Options, but we side with Armstrong here.

Almost definitely smaller bonuses for...

· Securitisation pros - down 10-30%, says Armstrong. MBS types will see a decline of 30-35%, says Options Group.

· Leveraged financiers - down 30-35%, says Armstrong. No predictions from Options Group, but what with all those write-downs, even a 30-35% cut looks generous.

· Fixed income in general - down 30%, says Armstrong. Down 15-20%, says Options Group.

No agreement on...

· Equities in general - the average bonus across the piece in equities will be up 10-15% according to Options Group. Armstrong's predicting they'll be flat to down 10%.

· Investment bankers - up 10-15% according to Options Group. Down 10-15% according to Armstrong.

AUTHOReFinancialCareers UK

Insider Comment

an
anon
19 November 2007
I'm sick of people posting comments saying things like "don't shoot the messenger" to defend journalists who are basically just using spurious maths/logic to make sensatioanlist head-lines.
People don't complain because they're angry that articles like these shock them into thinking they won't get paid, but because they disagree with their content / tone and have a nagging belief in something called the truth.
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Er
Eric Options Group
16 November 2007
Anonymous, Derivatives: goto our web site and give us a call
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An
Another Senior Headhuner
16 November 2007
Our company produces an annual survey post bonus. We start collating data around the end of November. This year is going to be harder than ever to give breakdowns either between the tiers or the asset class or the function. Why? Because of the vast differentials in RoE between the banks and the collapse of the dollar (in which many awards are made, hedging aside). Generalisations are generally wrong but surveys serve as a useful guide nevertheless as substantiated by client demand. Given such unprecedented disparity, it is impossible at this stage to give a figure that will be accurate to all. We are seeing areas in some banks likely to enjoy rises of as much as 40% whilst others will be fortunate to have a job let alone a bonus; so effectively a 100% down. That's one hell of a spread that could apply to two divisions of the same bank alone! That the global bonus pool is down this year is beyond doubt. We estimate it is up 10% in the M.E, flat in Asia, -15% in Europe and -30% in the US (excl. cable hike).
Headhunters produce this data because clients want it. So stop shooting the messenger.
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Ba
Barry OC
16 November 2007
we'll all get paid a mint
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An
Anonymous
15 November 2007
Question for Eric, I'm moving to Hong Kong in an equity derivatives research role at Associate level. What shoul I expect as basic and bonus?
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