London bank bonuses plunge across board in M&A drought

BLOOMBERG 

The slump in dealmaking cut pay for investment bankers at almost every level of seniority in London last year, more evidence of the global slowdown in the sector.
The highest tier of vice presidents made 13% less, and all but the most junior associates saw their total compensation fall, according to a survey of about 250 bankers by global recruitment consultancy Dartmouth Partners.
While base salaries generally continued to rise, bonuses were slashed as staff shared in a smaller pool of deal fees. The M&A drought has continued into this year, resulting in a wave of redundancies across multiple countries.
Goldman Sachs Group Inc, JPMorgan Chase & Co, Bank of America Corp, Morgan Stanley and BlackRock Inc are among those to have gone through rounds of cuts, while UBS Group AG is expected to jettison more than half Credit Suisse’s 45,000-strong workforce.
Investment banks are adjusting their focus while dealmaking is in the doldrums, leaving trading desks as the faster-growing source of revenue. Talent is shuffling across US investment banking, accelerated by several European banks’ retreat from the market.
In the UK, remuneration at Goldman Sachs — the best-paying investment bank in 2021 — fell the hardest in 2022,
with associates’ total compensation down 28% and VP pay falling almost 25%, according to Dartmouth.
While it remains one of the most competitive for pay, particularly for experienced staff, the Dartmouth survey found that Wall Street rivals Bank of America, JPMorgan and Morgan Stanley were offering more at certain pay grades in London.
Credit Suisse was near the bottom of the pack in the year before its rescue sale to UBS, with associate pay falling by 18%, while VP compensation dropped by 29%, according to the survey.
Global M&A activity fell by more than a third during last year, according to Bain & Co data, as geopolitical tensions, stubborn inflation and soaring interest rates discouraged
corporate risk-taking.
The first half of this year brought a further 42% decline according to data compiled by Bloomberg, making it one of the worst periods for deals in  a decade.
Given the tough environment, bankers at the biggest firms “are largely willing to accept lower than hoped-for compensation based on the current market conditions — but only if their banks can effectively temper expectations and demonstrate the reasons for any lower than anticipated pay,” the report’s authors wrote.