Canada’s biggest banks see 18% rise in bonuses

Bloomberg

Canada’s biggest banks shelled out 18% more for bonuses, unleashing the biggest increase in data going back nine years as the firms battled for talent to take advantage of a boom time in capital markets.
The country’s six largest lenders set aside $14.9 billion for performance-based compensation in their 2021 fiscal year. The increase trounced the 6.3% average for the past decade. Except for Toronto-Dominion Bank, all of Canada’s other six largest lenders increased bonuses by the most in data going back to 2013.
Canada’s banks are riding high on almost two years of torrid activity in capital markets, starting with an early-pandemic increase in trading that gave way to a surge in equity and debt financings and more recently a flood of mergers and
acquisitions. That boom, and expectations that it will continue next year, have heightened the competition among banks to
attract and keep top talent.
“The mood is jubilant, and bankers’ expectations are high,” Lara Zink, chief executive officer of Women in Capital Markets, said in an interview. “The war for talent is very real, and top performers absolutely need to get compensated as part of these firms’ retention strategies.”
National Bank of Canada and Scotiabank had the biggest increases to their bonus pools, while Toronto-Dominion had the smallest increase to its reserves for performance-based pay.
Banks saw a 3.3% rise in annual revenue from capital-markets operations to a combined C$32.7 billion in the year ended October 31. Underwriting and advisory fees rises 22% to a record C$6.78 billion.
The increases in Canada could be a harbinger of similar windfalls elsewhere in the global financial industry. On Wall Street, banks are poised to hand investment bankers and traders their biggest bonuses since the financial crisis, according to compensation consultant Johnson Associates Inc.
The Canadian banks pay bonuses based on performance, with most of the variable compensation going to capital-markets professionals such as investment bankers, analysts, salespeople and traders. Variable compensation reflects the amount reserved, not paid out, and doesn’t include base salaries. Bonuses are typically distributed in December.
This year’s increase in performance-based pay may in part be meant to help make up for last year’s smaller bump, which was held back by concerns that the firms would look bad paying bankers a windfall in a year when much of the country was suffering economically or out
of work.