Bonuses account for a significant part of Wall Street bankers’ total compensation|dflorian1980|CC BY-SA 2.0
Most bankers can expect smaller bonuses this holiday season as they are projected to get 25% less than last year. It is the second year of declining bonuses on Wall Street.
A report by consulting firm Johnson Associates indicates that cash and stock-based compensation in the banking sector has shrunk for 2023 due to a wave of federal rate hikes, bank shutdowns and slow IPOs.
The compensations are still higher than in 2022, when Wall Street saw the biggest drop in bonuses since the Great Recession, per NY state data. In 2021, The Street saw bonuses skyrocket.
Who will be hit?
The hardest hit will be investment bankers who advise companies on mergers and acquisitions—taking home 15% to 25% less financial compensation.
Retail and commercial regional banks could see a 10% to 20% decline, while hedge funds and asset management firms may receive 5% to 10% less bonuses.
The only ones who will get the same or 5% to 10% higher cash bonuses are global retail and commercial banks like Goldman Sachs and other wealth management companies.
2024 could also be a slow year for bankers’ bonuses, which account for a significant part of their total compensation.