As bonus predictions shrivel, 20% or more of front office bankers will receive virtually no bonus this year
Stop thinking about your bonus: it might not happen.
As banks begin meetings to determine the size of this year's bonuses, it's becoming clear that a lot of people are likely to receive nothing for 2011, and that those people won't just be in the back office.
"There's a lot more willingness to pay no bonuses to people in the front office this year," says Jon Terry, a partner in the reward and compensation practice at PricewaterhouseCoopers. "It wouldn't surprise me if 20% or more of people in the front office receive very, very small amounts or zero. I'd expect twice as many front office people to receive zero as for 2010."
This is echoed by Stéphane Rambosson, managing partner at search firm Veni Group. Rambossen told Reuters bonus pools are likely to be down 30-50% on 2011 and that the proportion of zero bonuses will probably be, "huge."
In the meantime, Alan Johnson, compensation guru of Wall Street, has revised his bonus predictions for 2011 down, again. We noted in August that Johnson was becoming increasingly bearish. Since then, he's become more bearish still. This year, his bonus expectations have evolved as follows:
Alan's deteriorating predictions
Investment banking - advisory: Q3 prediction: Down 10-20%; Q2 prediction: Up 5-10%; Q1 prediction: Up 5-15%.
Investment banking - underwriting: Q3 prediction: Down 10-20%; Q2 prediction: Up 5-10%; Q1 prediction: Up 5-10%.
Equities (excluding prime brokerage): Q3 prediction: Down 20-30%; Q2 prediction: Down 0-15%; Q1 prediction: Up 5-10%.
Fixed income: Q3 prediction: Down 35-45%; Q2 prediction: Down 20-30%; Q1 prediction: Up 10-15%.
Prime brokerage: Q3 prediction: Down 0-5%; Q2 prediction: Up 0-5%; Q1 prediction: Up 5-10%.
Asset management - equities: Q3 prediction: Down 0-5%; Q2 prediction: Up 0-5%; Q1 prediction: Up 10-15%
Asset management - fixed income: Q3 prediction: Up 0-5%; Q2 prediction: Up 0-10%; Q1 prediction: Up 5-10%.
High net worth: Q3 prediction: Up 0-5%; Q2 prediction: Up 0-5%; Q1 prediction: Up 5-10%.
Hedge funds: Q3 prediction: Down 5-10%; Q2 prediction: Up 0-5%; Q1 prediction: Up 10-15%.
Private equity: Q3 prediction: Down 0-5%; Q2 prediction: Up 0-5%; Q1 prediction: Up 10-15%.
