There's not much optimism about investment banking bonuses in London or New York. Pay for traders is likely to be especially poor, but Citigroup, Bank of America and J.P. Morgan are all expected to cut the bonus pool by up to 15%. Even employees in the relatively high-performing investment banking division shouldn't set their hopes to high as regulatory fines have hit banks' ability, or willingness, to pay large bonuses this year.
What about Asia, though? Anonymous senior bankers at Citigroup, ING and UBS in Hong Kong and Singapore gave us their expectations. The over-riding message is one of similar pessimism to Western markets, despite the perception of Asia as a faster-growing market.
Citigroup's sales and trading staff in Hong Kong are expected to be hit particularly hard this year, as revenues continued to tumble within both the equities and fixed income divisions of the vast majority of large banks. Rachel Liu, an associate director at the financial executive search firm Profile & Selection, says: "We don’t anticipate the traders to rake in big bonuses as they still struggle to operate within a much more regulated landscape and the banks want to tighten their risk boundaries."
Private banking remains the place to be in Asia as banks are reluctant to cut bonuses for staff in the face of fierce competition for talent. Employees at Citi in Hong Kong should still be able to get a bonus worth four to six months' salary, according to this banker.
Another banker at ING's Hong Kong office is more optimistic, particularly about the IBD part of the business, where employees are expecting something better than last year - largely because last year was so bad. Staff there are looking at a payout of approximately six months' salary.
No one at UBS in Singapore is expecting much of a payout this year, according to one employee in the region. The hefty £500m levied against the bank in November for its part in the currency manipulation scandal has made the bank reluctant to reward employees across the board. At best, Singaporean bankers at the Swiss bank are expecting bonuses to be flat, but it could be as little as two months' salary, he suggests, adding that various divisions might end up with very different figures. "Previously, some in the front office used to get only one month's salary when things were particularly bad," he says. "But it could also be many multiples of salary in really booming years." This banker works in the risk, and is only expecting a few months' salary at most.
Will Tan, managing director at executive search firm Principle Partners in Singapore, says that these predictions are reflective of the wider Asian market this year: "Bonuses this year are likely to be weak across the board."