Top bankers in Asia see pay cuts of 50% after drought in deals

HONG KONG – Top bankers in Asia ex-Japan at Wall Street’s biggest firms are having their worst payouts since the financial crisis more than a decade ago, according to people familiar with the matter.

On average, managing directors at banks including Goldman Sachs, Morgan Stanley and Bank of America have seen their total compensation drop by 40 per cent to 50 per cent, with payouts for senior MDs falling to between US$800,000 (S$1.05 million) and US$1.5 million, and for first-year MDs to US$600,000 to US$1 million, the people said.

Star bankers are suffering milder cuts of 20 per cent or less in their compensation after a bumper year in 2021, with a few still taking home around US$2 million. Non-performers are seeing reductions of 60 per cent to 70 per cent, with many being left out altogether from the bonus pool.

The figures reflect broad trends across major Wall Street firms in Asia, the people said. Pay may differ for certain product groups and countries.

Global investment banks are now pushing hard to keep a lid on costs after increasing their staffing over the past few years in a war for talent and higher inflation. While Asia has been their biggest growth market for years, job cuts have proliferated and the tough bonus news is expected to help reduce headcount further.

Goldman plans to slash 3,200 jobs globally and has already made two rounds of reductions in Asia since September, firing mostly China-focused bankers. Morgan Stanley has also jettisoned bankers focused on China.

Business has been hard hit in China by a regulatory crackdown and the nation’s now-abandoned pursuit of its zero-Covid policy. Most dire was a move by Beijing to limit the ability by domestic companies to sell shares overseas, triggering an 88 per cent slump in those deals in 2022. Globally, investment banking revenue declined about 50 per cent in 2022 at the largest lenders.

While some banks have sought to narrow the pay gap among bankers rather than cutting jobs as deals may bounce back in the second half of 2023, there could be more cuts overall, one of the people said.

MDs are the hardest hit. Total compensation of directors has fallen about 30 per cent to a range of US$400,000 to US$600,000, while vice-presidents are less vulnerable, with a decline from 2022 of about 10 per cent to 15 per cent, the people said.

The drop is particularly prominent in 2023 for Goldman, which handed out record payout in 2022, or 20 per cent above the market, one of the people said.

Not everyone is seeing a big drop-off in pay, however. Country teams in Australia and South Korea and those in clean energy and mergers and acquisitions have performed better, the people said.

Banks are also keen to retain new, top-performing staff in anticipation of a rebound in deals. Citigroup, for example, is raising compensation for its junior investment bankers by as much as 15 per cent. BLOOMBERG