HONG KONG • Global banks including Morgan Stanley and UBS Group are cutting investment banker bonuses in Asia after deals cooled, with senior employees taking the biggest hit.
People familiar with the matter said the Asia ex-Japan bonus pool at UBS' investment banking unit fell by about 14 per cent for last year, while Morgan Stanley's is about 9 per cent lower.
Citigroup, which had its best fourth quarter at the business since 2017, reduced its pool by about 6 per cent as it zeroed in on costs, one person said.
Goldman kept overall bonuses largely flat though it raised spending on variable compensation for top-performing bankers, another person said. It arranged fewer stock sales last year in the region excluding Japan, ranking fifth and trailing Morgan Stanley and Citigroup, according to data compiled by Bloomberg. It also fell to the second place in mergers advisory from the top spot in 2018.
Asia has struggled to maintain a long boom, partly because China's economic growth has slowed to a three-decade low, pressured by the US trade war and tightening bank liquidity. Deal-making in Asia, excluding Japan, waned last year. The value of mergers fell 9 per cent, while the stocks sold in the region were the lowest since 2013, Bloomberg data shows. A compression in fees has also continued.
UBS underperformed last year as it took a hit from being suspended from sponsoring equity sales in Hong Kong, the world's busiest initial public offering market. The Zurich-based lender has also trimmed costs and is restructuring its businesses as part of a global revamp. Earlier this month, the bank was again cleared to sponsor IPOs in Hong Kong.
Morgan Stanley cut the Asia bonus pool after lower merger and acquisition fees, with overall investment banking revenue falling about 12 per cent, a person said. The bank had a record year for the business in 2018, boosting its bonus for the region by double digits.
Citigroup's Asia investment banking revenue rose 4 per cent last year, a person said.
Across the major banks, managing directors and executive directors are facing the biggest bonus reductions of between 9 per cent and 12 per cent. Bonuses for vice-presidents are largely flat, while most associates got a slight raise, the people said.
Total compensation for performing senior bankers ranged from US$1.25 million to US$1.75 million (S$1.7 million to S$2.4 million), depending on the geographical location and sector coverage, people familiar with the industry trends said. For junior managing directors, the range was US$1 million to US$1.25 million, they said.
BLOOMBERG
