Bankers’ Bonuses Expected to Rise
Bonuses for Wall Street traders and investment bankers should rise 5% to 10% for a third straight year, according to a survey released Tuesday by compensation consultant Johnson Associates Inc.
Banks have benefited from increased merger activity, growth in prime brokerages as hedge funds proliferate, and a surge in trading profits despite a slow second quarter.
“Third quarter is typically the weakest quarter of the year, but this year it was an anomaly and was perhaps the strongest,” said Andrew Roost, a Johnson Associates vice president. “It helped solidify the year.”
Merrill Lynch analyst Guy Moszkowski estimates that Wall Street compensation will total $32 billion this year. Compensation typically amounts to close to half of revenue.
Although salaries for bankers and traders are often in the low- to mid-six figures, bonuses can be several times larger.
A managing director in investment banking can command $2 million or more. Executive search firm Options Group estimates that a global mergers chief might take home $8 million to $9 million this year, up 20% to 25% from 2004.
Banks such as Goldman Sachs Group Inc., Lehman Bros. Holdings Inc. and Merrill Lynch & Co. benefited from increases in mergers and energy trading.
Bear Stearns Cos., Morgan Stanley and commercial banks Citigroup Inc. and JPMorgan Chase & Co. also enjoyed investment banking gains.
Wall Street profit could rise 13% this year to $14.4 billion, New York state Comptroller Alan Hevesi has estimated.
Most employees learn their bonuses in the weeks after banks end their fiscal years. The year-end date varies by company, but most are in November or December.
