Top investment bankers in Asia face 50% pay cuts

Bloomberg

Top investment 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.
On average, managing directors at banks including Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. (BofA) have seen their total compensation drop by 40% to 50%, with payouts for senior MDs falling to between $800,000 to $1.5 million and for first-year MDs to $600,000 to $1 million.
Star bankers are suffering milder cuts of 20% or less in their compensation after a bumper year in 2021, with a few still taking home around $2 million. Non-performers are seeing reductions of 60% to 70%, with many being left out all together from the bonus pool. The figures reflect broad trends across major Wall Street firms in Asia. 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 markets for years, job cuts have proliferated and the tough bonus news is expected to help reduce headcount further.
Goldman has slashed 3,200 jobs globally and has made two rounds of reductions in Asia since September across divisions. The cut in investment-banking in the first round involved firing mostly China-focused bankers.
Globally, investment-banking revenue declined about 50% last year at the largest lenders.
Globally, investment banking fees at Goldman fell 48% to $7.36 billion but other divisions such as fixed income, currencies and commodities and equities fared much better. Asia overall contributed about 12% of their global revenue.
While some banks had sought to narrow the pay gap among bankers rather than cutting jobs as deals may bounce back in the second half this year, there could be more round of cuts in 2023.
Managing directors were the hardest hit. Total compensations of directors fell about 30% to a range of $400,000 to $600,000, while vice presidents are less vulnerable with about 10% to 15% decline from last year.
The drop is particularly prominent this year for Goldman which handed out records payout last year, or 20% above the market, one of the people said.
Not everyone is seeing a big drop off in pay, however. Country teams in Australia and Korea and those in clean energy, merger 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 Inc., for example, is raising compensation for its junior investment bankers by as much as 15%.