Bank of America bonus day: Big disparities after huge hiring
Last year was a big year for recruitment at Bank of America. In the words of CEO Brian Moynihan, hiring managers spent the first half of the year "sort of overachieving," which - combined with a drop-off in exits, meant the bank ended up with more staff than anticipated. In European fixed income alone, it added 60 external hires in the first six months; in Moynihan's words, hiring in macro happened "continuously" last year.
Today is the day that all that the impact of all that hiring becomes clear. It's BofA bonus day, and early indications are that there are some pretty big disparities in compensation. BofA declined to comment on its bonuses, but on the bank's macro desks in particular, headhunters say there are signs of high peaks and low troughs as awards are heavily differentiated. "There are people whose bonuses are very good, and others whose are very bad," reflects one headhunter.
In investment banking, Financial News reports that bonuses were down 30%, but that in equity capital markets and leveraged finance they're down 50%, although zeroes were not common. This is perhaps surprising given that BofA isn't planning to make redundancies, but to rely on staff attrition and zeroes are one way of galvanizing this.
BofA is under pressure to pay its investment bankers after they did relatively better than rivals. However, it's also under pressure to pay its fixed income professionals after a strong Q4 when revenues increased 50%. Last year's heavy fixed income hiring may temper its generosity.
At other banks, sales and trading bonuses appear to have declined less than expected. At Goldman Sachs, insiders say the markets bonus pool was eventually down around 15%, and that traders were treated better than sales. In trading, Goldman bonuses were typically down 5-15%; in sales, the decline was more like 20-50%. BofA people who benchmark themselves to this may still get to feel pretty good.
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