Hong Kong investment bankers are overwhelmingly disappointed with their 2016 bonuses, despite plenty of warning that they would be down on the previous year.
“In the dozens of conversations my team and I have had with bankers in the past four weeks, not a single banker has been happy,” says Christian Brun, managing partner of headhunters Wellesley Partners in Hong Kong.
“Those who had a good year in Asia in terms of revenues were particularly unhappy. Because global IB numbers were down, every bank was given a smaller local bonus pool,” says Brun.
Bonuses at global investment banks in Hong Kong are 10% to 20% lower on average than 2015, according to industry sources.
“People at my level, managing directors, generally got poor bonuses at the major banks in Hong Kong, but they saw that coming. The IPO market wasn't as strong as 2015, for example,” says an ex-UBS MD who asked not to be named.
“The overall feeling is very negative, there’s a lot of disappointment when speaking to bankers here,” says former Deutsche and UBS banker Benjamin Quinlan, now CEO of Hong Kong consultancy Quinlan & Associates.
“One or two bankers are a little more optimistic and feel it’s a knee-jerk year,” he adds. “But the general thinking is that this downward bonus trend is not likely to end soon. Banks are increasingly reducing compensation to shore up capital positions and to help meet any future litigation costs.”
“In general, the European banks in Hong Kong are paying even less than the Americans,” says Quinlan. “Their financial results have been less compelling and a number are also going through some painful restructurings that many of the American banks went through years ago.”
In December, for example, Credit Suisse was forced to substantially downgrade its APAC income targets for 2018.
Unsurprisingly, Deutsche Bank staff are among the most disgruntled in Hong Kong. As we’ve reported, the bank isn’t awarding proper bonuses to anyone above associate vice president level. Most senior bankers’ bonuses are 100% deferred.
“This week a lot of bankers there find out their bonuses – I’m expecting plenty of Deutsche CVs,” says Hong Kong trader-turned-headhunter Matt Hoyle. “Even the Deutsche guys who are getting something will have to wait five years to cash it in.”
Across the banking sector, bonuses were particularly bad for “those working in the HK/China secondary equities market”, says Quinlan. “That’s because 2016 trading turnover was down significantly from the mainland’s bull run in mid-2015, with revenues and bonuses taking a hit as a result.”
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