Morning Coffee: Bonus Structure May Cost Barclays Top Bankers

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If Barclays doesn’t allocate more bonus money to its thriving U.S. mergers and acquisitions division, the firm could see many of its top investment bankers head out the door.

I-bankers at Barclays had the cash portion of their bonus capped at just over $100,000 last year, upsetting many within the group, and forcing some to borrow cash from the firm against their deferred compensation just to continue financing their lifestyles, a source close to the situation told eFC.

“We were told last year to wait and see” whether cash bonuses would continue to be restricted, said the source. “If we don’t see them this year, it will be ugly.”

A firm cash-cap on bonuses this year would likely go over worse than in 2011, considering the group’s strong performance. Barclays’ M&A business has grown 17% through the first three quarters of 2012 compared to the same period last year, with roughly two-thirds of the fees generated by the Americas group. On average, M&A fees fell by 21% among the top 10 investment banks during the first three quarters of the year.

“My hunch is [Barclays] can’t do anything about it,” said one recruiter who works with the firm. “My hunch is people start leaving.”

The exodus may have already begun. Reuters reported that three of Barclays top technology investment bankers from New York have left the firm to join unnamed rivals.

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