Wall Street bankers may want to hold off on those yachts, yellow Lamborghinis or Manhattan pied-a-terres, based on emerging bonus projections.
Bonuses, which firms pay to attract and retain key talent, may be down by as much as 25 percent this year throughout the industry, according to analysts and market participants.
Many of Wall Street’s wheelers and dealers will see their total compensation, including salary, drop by as much as 20 percent, according to Wall Street recruiting specialist Options Group.
Michael Karp, the group’s president, said bankers will likely take it on the chin after Wall Street’s revenue-generating engine slowed over the summer. The sharp deceleration has intensified as traders fret about the global markets and the pace of the US recovery.
“There’s a lot of speculation about bonuses being high this year, but there’s just no way in the world that banks are going to be paying big bonuses,” Karp said.
His firm, which polled some 1,500 financial institutions, found banks are facing budget shortfalls of 20 percent or more in various business units and can’t afford to pay rich bonuses.
Morgan Stanley’s total compensation may be off by as much as 23 percent, while Goldman Sachs’ bankers may be down as much as 39 percent from last year, according to Barclays estimates.
“Compensation is under pressure this year, especially in the back half of the year, because the revenue environment has been so weak,” said Barclays analyst Roger Freeman.
Indeed, sources said compensation for investment bankers at JPMorgan Chase may be down by 15 percent after third-quarter earnings results, released on Wednesday, showed revenues down 11 percent.