Morgan Stanley, Goldman lead bonus bounces for Asia bankers

The total compensation for Morgan Stanley's investment bankers in Asia was boosted by about 20 per cent. PHOTO: EPA-EFE

HONG KONG (BLOOMBERG) - Morgan Stanley and Goldman Sachs investment bankers are getting the biggest bonus bumps among peers in Asia after revenue from the region climbed by about a third on increased deal flows.

The total compensation for Morgan Stanley's investment bankers in Asia was boosted by about 20 per cent, while at Goldman it will rise around 15 per cent, people familiar with the matter said, asking not to be identified because bonus decisions aren't made public. The numbers for UBS Group in the region rose about 10 per cent, while at JPMorgan Chase & Co and Citigroup they climbed about 6 per cent and 3 per cent, respectively, the people said.

Wall Street firms generated record investment banking revenue in the region as fiscal and monetary stimulus in the wake of the pandemic helped stoke stock and bond sales and trading. Cash has been pouring into China at a record clip as the Communist Party-ruled nation was able to control the virus and, unlike other major economies, eke out an expansion.

Spokespeople at Morgan Stanley, Goldman, UBS, JPMorgan and Citigroup declined to comment.

More hiring of senior bankers and an increased headcount could also have raised the overall bonus pools, the people said. Bonuses for individual bankers will vary widely, with better payouts for those focusing on equity capital markets, health care and technology deals, the people said.

Total compensation for equities, fixed income sales and trading at Morgan Stanley also rose about 20 per cent, propelled by rising institutional client flows and a refocus on its rates, currencies and commodities trading in the region, one of the people said.

The pool earmarked for UBS' global market division in Asia is likely to rise about 15 per cent, another person said. Bonuses at the Swiss bank will be announced internally before the Chinese New Year next month.

Topping Asia

Average fees on deals for most global banks improved from the prior year, data complied by Bloomberg show. Morgan Stanley has been the top Asia-Pacific equities arranger since 2017. The firm's regional revenue rose 32 per cent to US$6.75 billion (S$8.95 billion), according to its earnings report.

The bank's institutional securities business had a strong year, with growth in Asia a standout, chief financial officer Jonathan Pruzan said on an earnings call last week.

Morgan Stanley also boosted the compensation of its chief executive officer, James Gorman, by 22 per cent to US$33 million last year as the bank posted its third consecutive year of record earnings.

Goldman bounced back to second in equity underwriting in Asia-Pacific in 2020 from 7th the year before. Its revenue in Asia rose 33 per cent to US$6.2 billion, while its global investment-banking revenue climbed 27 per cent as fees from equity underwriting nearly tripled. The bank's stock traders delivered 40 per cent higher revenue, making up for fixed-income trading that fell short of analyst estimates.

On merger advisory, Morgan Stanley and Goldman also topped the league table across Asia, with 16 per cent and 14 per cent market share respectively, according to Bloomberg data.

JPMorgan and Citigroup ranked 5th and 7th arranging stock sales last year in Asia-Pacific. A Citigroup's spokesman in Hong Kong said the firm had a record year for investment banking revenues in Asia, with a 16 per cent increase.

Tempering payouts

Even so, globally, the biggest U.S. lenders are tempering expectations for employee payouts as workers across the world are reeling from the pandemic.

Bank of America's plan to keep the bonus pool for sales and trading unchanged at last year's level has disappointed some staff. Citigroup will leave the overall pot unchanged for equities, while boosting it for bond traders by at least 10 per cent. More generous increases approaching 20 per cent are under discussion at JPMorgan and Goldman, people familiar said in December.

Citigroup board is weighing a decision to reduce bonuses for a dozen of its top executives in its 15-member management team in an effort to appease regulators after it was dinged for failing to properly maintain risk management and internal systems, a person with knowledge of the matter said.

Citigroup chief executive officer Michael Corbat said in an earlier interview that the bank needs to be mindful of the environment and the many challenges for people and certain businesses when considering payouts.

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