"Bonuses in London are now equal to or above New York levels," says Alan Johnson, a Wall Street compensation specialist. "And unless things change, people are going to make a lot more money in London than in New York."
Johnson's prediction comes as US banks derive an increasing proportion of revenues and profits from growth markets in Europe and Asia, and as London in particular benefits from its position as a gateway to business in emerging markets.
Goldman has already shifted senior staff to the City and Merrill Lynch this week revealed plans to locate senior jobs in global markets and investment banking in Europe and Asia.
Johnson predicts it won't be long before Asian salaries also surpass those of New York: "At the moment, pay in Hong Kong and Shanghai is around 80% that of London. But it's becoming terrifically expensive and firms are having to pay to get the right people."
For anyone wondering, Johnson didn't say anything about Russia, where Bloomberg last week said bonuses were highest of all. He does, however, predict that bonuses will rise again this year, but says 2008 is looking iffy: "That will be a dramatically more difficult year. But for the time being at least there's so much momentum in these firms that it's not much of a reach to say bonuses will be up 10-15% in 2007."
Johnson Associates' forecast increases in bonuses 2007
Investment banking: 10-15% up
Plain vanilla equities: 5% up
Equity derivatives: 15%+ up
Plain vanilla fixed income: 5% up
Fixed income derivatives: 15%+ up
Prime brokerage: 15% up
Equity asset management: 10% up
Fixed income asset management: 5% up
Wealth management: 10% up
Hedge funds: 10-15% up
Private equity: 20%+ up