MDs are being let go by banks. They just want to earn $1.5m again

2026 is turning to out to be a funny year for jobs in banks. On one hand, revenues are rising by double digits in percentage terms. On the other hand, banks are cutting costs. Middle and back office staff are at the sharp end of this cost-cutting, but managing directors (MDs) in client-facing roles are not immune.

💥Follow us on WhatsApp for news alerts.💥

Matthias Schwarz, the former head of EMEA credit trading at Bank of America in London, says banks are increasingly jettisoning markets MDs in their 40s. They are particularly jettisoning markets MDs in sales roles, he says. 

This is because sales revenue accountability is less transparent than in trading. “If a trader makes $20m, banks can’t simply replace him or her with a VP, but if you have an MD that covers a major client there will typically be hundreds of other touchpoints so that in the short to medium term at least you can make do with a more junior VP," Schwarz says. "Sales relationships are much more institutionalised.”

Sales MDs are therefore spat out more often than others. But when any MD is let go, Schwarz says they must confront a harsh financial reality. Their removal has often been preceded by years of dwindling compensation, and they are unlikely to recover their former earning potential again.

"There are MDs whose total compensation has gone from $1.5m to $1.2m to $950k," says  Schwarz. "They always want to get back to $1.5m but unfortunately they are not worth that any more, and they won't get that in a third or fourth tier bank."

No one wants to hear this, but Schwarz isn't alone in delivering bad news. Alan Johnson, founder of Wall Street pay consultancy Johnson Associates, says banks are giving up on their tactic of 'starving out' poor performers with years of low bonuses in the hope that they'll simply leave voluntarily. Starving people out takes too long, says Johnson, who's forecasting 10-15% staff cuts in front office jobs over the next two to three years. People are being forcibly removed.

Schwarz says MDs are the natural choice for the cuts, and not just because of their high salaries. Banks have overpromoted and now have too many people at the top of their pyramids, says Schwarz. “Ten year ago, there were fewer restrictions on MD promotions and a lot of people made MD. This was followed by the diversity push, when they promoted people for diversity reasons but didn’t reduce the overall number of promotions. Now, they are cutting costs and these MDs are the best place to start.” 

None of this is good news if you lose your MD job. But it's best to know the truth than to fantasise about the $1.5m. "People need to be realistic about their options," Schwarz warns. 

Follow me on X. Follow me on LinkedIn. 

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22  Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. 

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.