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Bankers Eye Biggest Bonuses Since Financial Crisis

October 27, 2021  

By Lucy Burton

City bankers are in line to take home their biggest bonuses since before the financial crisis this Christmas, experts have predicted, as easy financing and a flood of deals swells the overall pot.

Meetings about this year’s bonuses are scheduled to begin in the next few weeks. Bankers expectations are sky-high after being inundated with work through the pandemic. One investment banking chief said bonuses for some could rocket by as much as 50pc on last year. 

Third parties agreed. Philippa O’Connor, PwC’s pay specialist, said: “For many global banks this could be the biggest bonus outcome year since the financial crisis.

“The level of percentage increases for bank pools this year will vary significantly. That said, we anticipate that increases this year of 20pc or potentially more in some cases will not be unusual.”  

Investment banks have fared extremely well during the pandemic as the chaos triggered a rush of capital raising, mergers and stock market floats. 

However, many lenders curbed rewards in 2020, aware that stories of bankers taking home giant cheques in a crisis would look insensitive and under pressure from UK regulators to show restraint, as the pandemic menaced jobs and households finances.

The mood for 2021 is different, however, with bankers saying their bonus expectations haven’t “been managed down yet”. Insiders say those who have been at the forefront of this year’s takeover rush will enjoy their best year since before the 2008 crash. 

Sophie Scholes, who runs financial services for recruiter Heidrick & Struggles, said: “Bankers are looking to make hay while the sun shines.”

Bank bosses who were forced to curb bonuses last year due to the pandemic are already giving out hints that this Christmas could be a good one for dealmakers. Jes Staley, Barclays’ boss, last week said bonuses will be higher this year following a dealmaking boom which propelled the bank to record profits.

There are also no suggestions that the Bank of England’s regulatory arm may look to rein in bonuses this year. One insider said that “decisions on level are for firms,” provided pay policies don’t promote risky behaviour and can be clawed back if any wrongdoing is later discovered.  

Earlier this month Dealogic data showed that investment banks in the Square Mile have posted revenues of more than £4.1bn so far this year from work on listings, takeovers and capital raisings – nearly double the £2.2bn reported during the same period last year and eclipsed only by the £4.2bn reported between January and September in 2007, just before the financial crisis.  

Generous banker payouts are not just expected in the UK. Former banker Bill Vlaad, who runs Toronto-based recruitment firm Vlaad and Company, said he expects to see “dramatic sustained increases to base salaries and total compensation for junior bankers,” which could come at the cost of either margins or some senior banker pay. 

“Firms simply can’t do the work they are paid to do without foot soldiers,” he said. US banks have been focusing on rewarding junior bankers this year amid criticism that those at the start of their banking career have been overworked and left burnt out by the pandemic. 

Originally posted by The Telegraph

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