Bank bonuses rise 1.9% in Canada

Bloomberg

Canada’s banks are spending 1.9% more on bonuses for fiscal 2022 than they did a year earlier, despite a dramatic slowdown in investment-banking activity, as they try to retain talent in the hope of a recovery in the year ahead.
The country’s six largest lenders set aside C$19.4 billion ($14.5 billion) for
performance-based compensation in the fiscal year that ended on October 31. That marks a sharp slowdown from the 18% increase in bonuses in fiscal 2021 and is far short of the five-year average of 8.2%.
Canada’s banks faced a difficult year in their capital-markets businesses, with IPOs and acquisition volumes plummeting from a record pace in 2021. There hasn’t been a single Canadian IPO over C$1 billion this year. Still, top bankers remain hard to replace, so firms are reluctant to grow too stingy with pay.
The record pace of deals and bonuses in 2021 “was a bit of an anomalous event,” said Adam Dean, president of Toronto-based Dean Executive Search.
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.
Changes to incentive-pay pools range from a 7.9% increase at Toronto-Dominion Bank to a 3.9% decrease at Bank of Nova Scotia. Royal Bank of Canada, which has the largest capital markets business among Canada’s banks, also had the largest variable compensation pool at C$7.13 billion.
A good portion of this year’s increases likely
went to junior bankers, who have a lot of other
opportunities, said Bill Vlaad, president of Toronto-based recruitment firm Vlaad & Co.