Morning Coffee: Junior bankers wake up to new reality of minuscule bonuses. How to spot a jerk boss at interview
How much you earn in banking has always been beyond your control. Yes, there's pay for individual performance, but more important is the broader economic climate and the number of deals getting done.
Today's junior bankers are learning this lesson early. While working hours for many in M&A and equity capital markets fell last year in line with declining revenues, analysts and associates still worked hard - 72 hour weeks were the norm across M&A in 2022, but while hours dwindled pay appears to have plummeted.
The New York Post claims that bonuses for some juniors at Goldman Sachs were cut by 90% in this year's bonus round, compared to their predecessors' piles of cash in 2021. The new Goldman junior bonus is allegedly $10k-$15k, down from $95k+ last year.
Given that Goldman pays analyst bonuses in the summer, we presume the Post is mostly referring to bonuses for associates and junior VPs. Following the 2022 bonus round, the highest paid first year associates at Goldman were reportedly on $400k in total compensation (salary plus bonus). This year, the implication is that $200k would be a fine thing.
If Goldman has indeed cut junior bonuses savagely, it won't be alone. At Morgan Stanley in London, there are suggestions that top third year associates received bonuses that were merely 25% of salary this year, down from average third year bonuses of 115% last year. Bucking the trend, Citi has reportedly increased salaries 10-15% for some associates and VPs, but Citi juniors claim that bonuses will be cut to compensate and that the salary increases aren't universal anyway.
Grumbling about Goldman Sachs' junior bonuses comes after Goldman Sachs CFO Denis Coleman said earlier this month that the firm had cut pay for its senior people so that it can reward the employees who earn less money and are more impacted by inflation. Junior bankers don't seem to have benefitted. Nor do some GS staff working in low-cost locations - one software engineer at Goldman in Salt Lake City tells us bonuses there were "a lot worse than expected."
Separately, many years ago, when Bob Diamond was CEO, Barclays used to have a "no-jerk policy" when it came to hiring staff. This has fallen by the wayside under subsequent bosses but may have been misguided anyway - for individuals, the most useful advice is how to spot a future jerk boss in the hiring process. The Wall Street Journal says it can be done: it's a matter of asking the correct questions.
If you want to identify a jerk interviewer as a candidate, the WSJ suggests asking questions like: 'What will my performance review take into consideration?' (Beware answers like 'A good culture fit,' or 'My gut instinct'); “How quickly do you expect replies to your emails?”; and "What would you say micromanaging looks like?"
Meanwhile...
Banks are preparing for the deepest job cuts since the financial crisis. “It’s a reset because they over-hired over the past two to three years.” (Financial Times)
“Nobody is surprised, given the revenue shrinkage and how competitors are paying. But the numbers are shockingly low, especially coming down from the 2021 boom.” (Financial News)
Deutsche Bank will be paying its traders higher bonuses this year. (Bloomberg)
Citadel, however, made $16bn in profits last year. This was more than any other fund ever. (Bloomberg)
Morgan Stanley CEO James Gorman had his pay cut 10% to $31.5m. (Financial Times)
James Gorman says it's not for employees to decide whether to work remotely. (Fortune)
London finance professionals stopped looking for new jobs in Q4 2022. There was a 23% drop in people coming onto the market. (Bloomberg)
Fintech ICapital wants 100 new technologists. (Business Insider)
Applications to Revolut's data and engineering roles are up 30% following cuts at Microsoft, Amazon and Alphabet. (The Times)
ChatGPT scored B to B- on a Wharton MBA operations management exam, but it's no good at mathematics. (Financial Times)
An electronics engineering graduate made £4.3m growing weed while he had cancer, before being caught and imprisoned. (The Times)
How to handle failure, really. (Substack)
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