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A look at bonus expectations from eFinancialCareers' annual compensation survey.

"Forget about the bonuses of 2021. They’ll never happen again"

Confident about your banking bonus for 2022? You're probably a managing director. Bonus optimism is strongly correlated with seniority, according to our annual compensation survey.

1,500 of you responded to the global survey, which covered all areas of financial services and ran between late October and late November. As the chart below shows, MDs are the most ebullient about the coming bonus round. Analysts are the least. 

Many analysts received their bonuses in the summer. And compared to summer 2021, summer 2022's analysts bonuses were a terrible disappointment. Staff at more senior levels will be informed of their bonuses in January and February next year. 

While most of the associates who responded to our survey were comparatively optimistic about this year's bonuses, not all shared this sentiment. One associate at a US boutique M&A firm said he'd been given a terse communication from senior management: "Forget about 2021 bonuses - nobody will be paid at those levels ever again.” He said he was disinclined to do the job as a result, and that many other juniors felt similarly.

Most associates, however, seem pretty bullish. On average, they expect bonuses to rise by nearly 6% on 2021 while VPs expect an increase of over 4%. One VP suggested that MDs are being far too optimistic and that although the bonus pool will be down significantly, senior people will find their bonuses reduced the most. 

Why are directors and MDs so ebullient? Some senior staff in sales and trading roles said their pay is based on a formula. One Paris-based credit trading MD said he anticipated a 50% increase on this basis. Some pointed to guaranteed bonuses and the fact that high performers are paid well "regardless". Others simply said they'd had a good year.

For the most part, though, senior staff's optimism reflected strong PnL in some areas of the market this year (especially fixed income sales and trading) and a belief that the market could come back in 2023. Whether it does or not, senior staff will be needed to win new business and generate profits; expensive junior staff - whose salaries were hiked last year - are far easier to replace with the next round of graduates.

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AUTHORZeno Toulon

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