There are three more reasons for banks to pay lower bonuses this morning
This morning, three new negative forces have been added to the bonus mix.
They are: Nick Clegg (suddenly taking a harsh line on 'lavish bonuses' in a quest for political redemption); the Bank of England (pointing out that UK banks have big exposure to a sovereign debt crisis in Europe and should reduce cash bonuses to increase their capital buffers); and the Bank for International Settlements (which yesterday clarified Basel III, and said the world's largest banks must raise 488bn in capital, or face restrictions on bonuses).
Negative bonus momentum was there already.
Lower FICC volumes mean the fourth quarter isn't expected to be too good after all. Morgan Stanley has warned of an 10-30% reduction in its bonus pool. This is expected to be replicated elsewhere.
In reality, some people are likely to do ok in the 2010 bonus round; others will do dreadfully.
If you get a poor bonus this year, it will be for one of three reasons: your employer wants you to leave; your employer doesn't care if you leave; your employer doesn't think there's anywhere for you to go.
As we've noted previously, it's becoming prohibitively expensive to make senior staff redundant.
"There's less willingess to terminate people," says Lee Thacker, at search firm Silvermine Partners. "The strategy is going to be to pay a poor bonus and hope that poor quality people leave of their own accord." "
