Editor's Take: a frightening bonus season for the foreign firms
If there's one issue where Australian bankers are still very much under the global cost-cutting thumb, bonuses is it.
How's this for multi-national: some i-bankers in Australia working at US and Continental European firms will get less cash this year because of a UK tax.
Goldmans Sachs last month announced that its global workforce will share the pain of a 50 per cent tax on British bonuses. The same legislation has also prompted Credit Suisse to cut its international bonus pool by 5 per cent.
But it's not just the UK law (which is only a one-off) that is changing the size and composition of Aussie bonuses: wider international pressures (such as the G20 negotiations) are at work.
Bank of America-Merrill Lynch is a prime example. The firm is reducing the cash component of bonuses for top performers to just 25 per cent, with the rest made up of deferred payments of stock and cash.
Citi bankers, who were told of their payments back in December, also received a greater portion in stock. Australian employees may feel hard done by, but it's difficult to argue with head office when your firm is 24 per cent owned by the US government.
Perhaps the most contentious and anticipated bonus arrangement still lies in wait at UBS next week, according to headhunters I have spoken to.
Despite a barrage of bad news aboard, the firm continues to excel in Australian i-banking deals and, says one recruiter, its rainmakers will "feel hard done by if they don't reap the rewards. They think they deserve the money after they missed out last year. "
Least we forget, UBS payments were slashed in 2009, forcing local chief executive Matthew Grounds to fly to Zurich to argue that government support in Switzerland shouldn't affect bonuses in Aus.
That was a fairly fruitless argument to make at the height of the GFC, but luckily for UBS, its bankers had few alternative employment options back then.
This time round, UBS will be wary of triggering staff defections by being too miserly with its money. The expectation is for UBS bonuses to be competitive enough for it to keep its highly-regarded teams largely intact.
