The banking bonuses that could increase 35% in 2024
Banking bonuses were not great last year. But while they are on track to recover this year, they won’t recover equally as well across the board.
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According to analysis from compensation consulting firm Johnson Associates, the place to be if you want your bonus to bounce back in 2024 is in debt capital markets. There, Johnson Associates says that professionals should expect a 25% to 35% increase in their variable compensation.
That isn’t surprising. According to market intelligence provider Dealogic, debt issuance in the first nine months of 2024 was 42% higher versus the same period of 2023 in the US and 19% higher in Europe – the two largest debt markets in the world.
Johnson Associates says the second highest bonus increases in 2024 will be in equities capital markets (ECM), where rises of between 15% and 25% versus 2023 can be expected.
This figure is probably not as clear-cut or global as it might seem, however. According to Dealogic, ECM activity has not grown universally; IPO volume increased by 43% in the first nine months of 2024 compared to 2023 in the United States, the largest market in the world, but global figures were dragged back by a more modest 4% increase in Europe. Bonuses, therefore, will likely higher in the US than across the Atlantic.
Other bonus increases are on par with global revenue changes. Dealogic said that M&A fees had increased by 7% in the first nine months of 2024; Johnson Associates anticipates M&A bonuses to go up 5% to 10%.
Private equity bonuses are also expected to be on par with revenue. Johnson Associates expects PE bonuses to increase by 5%; roughly on par with the increases in fee-related private equity revenue seen at Blackstone and KKR, which increased 4% and 6% respectively in the first nine months of this year.
Equities sales and trading revenue was up between 18% and 30% at major banks in Q3 of this year; Johnson Associates expects equities sales and trading bonuses to increase by 15% to 20%.
On the face of it, therefore, things are rather straightforward: revenue number go up, bigger bonus for team. Our bonus expectation survey should clear things up.
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