Top performers at investment banks around the world will be recognised in the 2016 bonus season despite slimmer profits and a drop in pay in some parts of the industry, senior bankers and consultants say.
With headhunters in Europe bidding for top talents in the industry, the best will be protected even if overall bonuses are down, a senior banker told the Financial Times.
Speculation on payouts has started early, even though bonuses are not due until January, thanks to the strategic overhauls at several European banks and weak third-quarter results from some of Wall Street's biggest names.
Credit Suisse is expected to cut bonuses by as much as 60 per cent, while Deutsche Bank is reportedly looking at cuts of 30 per cent.
Traders and sales people in commodities, fixed income and currencies groups on Wall Street would see total pay drop by between 15 and 20 per cent, said Mr Alan Johnson, of New York-based consultancy Johnson Associates.
In Asia, bankers expect a small increase in their bonus pools, but again there is likely to be far more discrepancy in pay between top and bottom performers.
While the average may rise 5 per cent, "good people will be up 10 to 20 per cent", with equity businesses doing better than fixed income, said Hong Kong-based Justin McLennan, who specialises in equity market hires for headhunter Pelham. "From a team of 10, there may be one or two in that bracket."
That means that while European investment banking revenues are down 20 to 25 per cent in US dollar terms, bonuses may not fall as sharply. The senior US bank executive believes European banks will use the same logic as his firm, despite their public posturing.
"When (Deutsche Bank CEO) John Cryan says 'I'm going to cut bonuses', is he going to hit the corporate and investment bank? I doubt it," the banker said. He expects Mr Cryan, and his peers, will "crush" bonuses in areas in which the banks are becoming less focused but will "protect their people more than ever" in strategically important areas.
According to Goldman Sachs' regulatory filings, bonuses make up a "substantial portion" of the nine-month tally, which came in at US$10.62 billion (S$15 billion). Morgan Stanley's accrued compensation and benefits came to US$12.37 billion after nine months, down almost 3 per cent from the previous year.
Some banks are also said to be feeling less pressure than in past years to pay up simply to keep employees in their seats.
Banks "want to keep their good people but there is no pressure that (they) will be poached", the head of an Asian equity business told the Financial Times. "Generally banks feel that they don't need to (pay up) this year."
Market revenues in Asia have been "horrendous" in the second half, he said, so this could further reduce competition for staff as some banks may pull out of the region or shift away from people towards lower-cost electronic trading.