Morning Coffee: Flat is the new up for bonuses as money goes to severance. Goldman Sachs most eccentric and inventive partner is leaving
If you've noticed the compensation line at your employer skewing higher in 2023 and are hopeful that this means you will receive a higher bonus, be warned: you are probably deluding yourself. The Financial Times reported a few weeks ago that banks have spent $1bn on severance pay this year, and the latest compensation report from Wall Street pay consultant Johnson Associates, says that if more money is being spent on people, this is why.
The report makes for bleak reading. Bright spots for financial services pay in 2023 are few: Johnson says equities-focused hedge funds might pay more and that equity capital markets (ECM) bankers might be lucky as their revenues rebound. Bonuses for private bankers may rise between 5% and 10% as inflows and market appreciation boost revenues. Mostly, though, it's dire.
The chart below summarizes Johnson Associates' prognosis. Flat is the new up for 2023 banking bonuses. Advisory (M&A) bankers stand to suffer a 25% reduction on the bonuses they received last year, which themselves were not great. Most markets professionals are expected to suffer another small drop, although some fixed income professionals may see a small rise (Johnson doesn't say which, but banks' recent results suggest securitized products professionals and credit trading traders could be most lucky). Reuters describes the bonus outlook as gloomy. For the most part, there's no respite on the buy-side either.
Separately, one of Goldman Sachs' most eccentric partners is leaving. 56-year-old Jeff Currie, the global head of commodities research, announced his departure yesterday. One of Curries's Goldman colleagues tells Bloomberg that Currie is a "little bit of a mad scientist" and is 'creative, eccentric and inventive.'
Known for his often bullish calls on the oil market even when prices are slipping, Currie also funded a 2010 documentary about an attempt to reunite British pop band The Kinks. The impetus for his departure is unclear, but it comes amidst many other senior-level exits at Goldman Sachs and after a long period in which Currie's predictions for rising oil prices have not come to pass. We have never been this wrong for this long without seeing evidence to change our views,” he declared in June. He can now continue being wrong, but in private instead.
Wells Fargo hired Malcolm Price from Credit Suisse as head of financial sponsors. (Reuters)
Jens Welter, co-head of banking, capital markets and advisory for Emea at Citigroup: “The after-effect of Brexit is that we hire more organically in the EU. A lot of our bankers developed in countries on the continent and may have moved to the UK for bigger roles. But they are now less likely to move to London.” (Financial News)
UBS is retaining 12 senior Credit Suisse bankers in the Americas, including Emre Gunalp, co-head of healthcare for the region Jason English as well as Diron Jebejian, who stays on as Americas co-head of financial sponsors. (Bloomberg)
“It’s not that there is more stress per se since Covid, but the nature has changed. All jobs are ‘always on’ now, and there is an expectation that your diary can be filled up by others if they can find a gap. Stepping away from your laptop can feel mutinous.” (Bloomberg)
PWC wants more in-person learning. "We understand that students who missed out on face-to-face activities during the pandemic are keen to learn skills such as networking and presenting. That's why this year we've got an increased focus on face-to-face training, to ensure the students we work with have more exposure to in-person activities, our people and our clients." (Financial News)
A hedge fund spent $10m on a super computer to scrutinize investment strategies. "Wallace can see patterns that are not apparent to human portfolio managers. Humans can juggle roughly seven variables in our minds at any given time. Wallace sees more — the system analyses thousands of securities each day, each from more than 42 dimensions simultaneously, and monitors the complex interrelationships of all securities over time.” (Financial News)
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