Who on Wall Street will get bigger bonuses this year - and who will not

Deal makers and private equity employees are expected to receive the biggest hikes in bonuses this year on Wall Street, according to a forecast by compensation consulting firm Johnson Associates. -- PHOTO: AFP
Deal makers and private equity employees are expected to receive the biggest hikes in bonuses this year on Wall Street, according to a forecast by compensation consulting firm Johnson Associates. -- PHOTO: AFP

NEW YORK (Reuters) - Deal makers and private equity employees are expected to receive the biggest hikes in bonuses this year on Wall Street, according to a forecast by compensation consulting firm Johnson Associates.

Both M&A advisers and private equity employees can expect a 10-15 per cent rise in bonuses this year, Johnson Associates said, as global M&A activity rose 59 per cent to US$2.7 trillion in the first nine months of 2014, the strongest since 2007.

But share traders are expected to take a cut, with their bonuses likely to fall by 10 per cent this year.

Bonuses for employees in low-risk, fee-heavy businesses such as asset management could rise 5-10 per cent, while professionals in the volatile and risk-heavy business of fixed-income trading can expect bonuses to remain flat or fall by as much as 10 per cent, according to the forecast.

The declining fortunes of bond traders, once dubbed "Masters of the Universe" at investment banks, and the rising prominence of wealth managers show how Wall Street is changing after the financial crisis.

Overall, year-end incentive payments on Wall Street are expected to be mostly flat compared with last year, the consulting firm said.

"A mixed bag of fortunes awaits Wall Street professionals this bonus season, despite a moderately positive year across the financial services industry," said Alan Johnson, managing director of Johnson Associates.

Investment banking underwriters could see a 5-15 per cent rise in bonuses, thanks to an increase in capital-raising activity, especially initial public offerings, this year.

Bonuses for asset managers are also expected to rise by 5-15 per cent as increased assets under management and soaring equity markets boost results of cost-efficient firms.

Johnson Associates' forecasts are based on a survey of eight of the largest banks and 10 of the largest asset-management firms in the United States.