Dhe year 2022 has brought a slump on the stock exchanges and in investment banking, which is now reflected in significantly fewer bonuses from bankers. The Ukraine war, the energy crisis, rising inflation and the global economic slowdown have also messed up the business of the financial houses in the City of London, in New York, Frankfurt and other financial centers. There were significantly fewer IPOs, fewer mergers and acquisitions (M&A), fewer shares and bonds were issued and loans were granted. Observers expect the bonuses for investment bankers in the Frankfurt banking district to be a fifth to a third lower than for 2021.
The volume of extra payments in the City of London is believed to have fallen to its lowest level since 2013. According to an analysis by Sheffield Haworth, a recruitment firm for top bankers, banker bonuses fell by 45 to 50 percent in 2022 compared to 2021, which saw the coffers ring with the stock market boom and many M&A deals.
According to Sheffield Haworth, top bankers could see the sharpest declines of 40 to 45 percent for Goldman Sachs, between minus 35 and 40 percent for JP Morgan, and about a 35 or 30 percent drop for Citigroup and Bank of America. Goldman Sachs boss David Solomon has already warned his employees to expect a significant drop.
Most recently, an average of $400,000 to $600,000 in premiums
In recent years, senior employees of Wall Street banks have received, on average, twice as much in annual bonuses in addition to the base salary of $400,000 to $600,000. For the top earners, it is in the one or even two-digit millions. In the coming weeks, the banks will precisely quantify the bonus pots.
The London financial center has clearly lost its feathers. Data from Refinitiv shows that investment bankers’ revenues from deals with British companies fell 42 percent year-on-year in the current year – from $8.9 billion to about $5.2 billion. In German investment banking, fees fell by 39 percent to $2.6 billion.
Business leaders around the world have responded to the high level of uncertainty since the Ukraine war by rolling back plans for takeovers and mergers. According to Refinitiv, international M&A volume fell 38 percent to $3.6 trillion. Things went downhill, especially in the second half of the year. Another important factor is the rising interest rates with which central banks around the world are trying to combat high inflation.
